Best Practices

The Keys to Manufacturing Success


Running a successful lubricant business in today’s marketplace is no easy task. Lubricant plants produce hundreds of products that can be shipped in anything from small bottles to bulk railcars and involve thousands of stock keeping units (SKUs). Manufacturers must orchestrate a wide range of operations from procuring raw materials to hiring the right employees, maintaining equipment, ensuring quality and providing customer service.

Several lubricant manufacturers spoke with LubesnGreases about their key challenges and what it takes to run a successful lubes business. Not surprisingly, employee safety and regulatory compliance were at the top of the list.

Accidents in which chemicals or other controlled substances are released into the environment, as well as the potential for fire, are also real concerns. The fire at Intercontinental Terminals Co. in March demonstrated how such an incident can have dire consequences. The fire burned for days, shut down the Houston ship channel, impacted air quality, closed schools and caused evacuations in the Deer Park, Texas, industrial area. It impacted many businesses for weeks, many of which were associated with lubricant manufacturing.

Harji Gill, vice president and general manager for Calumet Specialty Products Partners, pointed to the business aspects his company cares about most. Calumets top priorities are ensuring safe operations at all our facilities, being good stewards of the environment and being a good neighbor in the communities where our facilities are located.Meeting and exceeding supply and service expectations for our customers in a cost-effective manner follow as business-critical priorities.

Beyond regulations, we operate with safety and environmental stewardship at the center of our decision making, he continued. Anyone getting hurt is unacceptable, and Calumet has an active safety program to ensure that all employees understand that getting the job done safely is our number one priority.We have an obligation to our employees to create a workplace where employees can come and safely perform their jobs.We train our employees to understand workplace risk and engage them to be an active part of our safety and environmental programs.

Weather also presents ongoing challenges to plant operations, especially with dramatic weather events increasing in frequency. Donna Weeda, chief operating officer for Warren Distribution, reported that flood control has been a big challenge for her business. We have had every plant impacted by the severe flooding that has taken place this past year. We had to address it in our Iowa plant in 2011, but did not take it far enough. Based on our learnings, we are formulating our business continuity plan for floods.

Reevaluating our supply chain and what protection we need to have in place for this type of natural disaster has become an ongoing need, she added. This has hit our Iowa plant the hardest, but we have experienced, on a smaller scale, flood or supply chain disruptions at all facilities.

Companies with multiple locations should have tailored plans that account for different risk profiles in each place. Because we have geographic diversity, each facility has different weather risks that can impact operations, said Calumets Gill. Each facility is equipped with their own plans for inclement weather events.For example, our locations in the Gulf must be especially vigilant during hurricane season.

At Calumet, we have contingency plans to ensure business continuity. We maintain some strategic inventory to allow for some extended downtime until normal operations can safely resume. In anticipation of a problem,we will bring operations to a halt, secure equipmentand ensure that our employees are safe and can manage the safety of their families, he elaborated.

Maintaining a reliable supply chain is a particular challenge in the face of perilous weather, natural disasters and even political unrest. We have always had concern over natural events that can occur and interrupt our ability to supply customers, said Scott Schwindaman, president and CEO of Lubrication Engineers. This goes back to the oil embargoes of the 1970s. We carry large inventories of raw materials at our plant to assure an uninterrupted supply of finished products. Our suppliers know of this, and at times of weather events, have even had us supply other companies until their facilities were back online.

Transportation is an indispensable link in an efficient supply chain. Changes in the trucking industry, such as new restrictions placed on drivers, can affect how the pieces fit together.

According to Weeda, Over the last five years, we have seen large changes in rail operations and the trucking industry. This has had a negativeimpact on how tight we can manage our inventories both for raw materials and finished goods.

For example, a shortage of truck drivers has plagued many U.S. industries in recent years, affecting how quickly and cost-effectively they can ship goods.

With the changes or new ways of doing things, the supply chain is not as reactive as we have had in the past. To protect ourselves, we have changed many of our processes that have in turn increased our costs. We have to have a dependable supply chain to make reliable supply happen day in and day out, she emphasized.

In todays competitive markets, the importance of controlling operating costs cannot be underestimated. Managing all aspects of our operations from a cost perspective is essential, given the competitiveness of the lubricants business, said Gill. We need to maintain an optimized product portfolio. Otherwise, we are wasting resources on products that are not contributing to the bottom line. We focus on having effective programs and procedures to safely manage the plant and reduce energy cost to run the plant.

We collaborate on all levels with third-party providers to ensure our effectiveness in sustaining our goal of servicing our customers in a flawless manner.The right products from our additive and base stock suppliers help us manage tankage and maintain the right level of inventories for ongoing operations, he continued.

Just in the past year,Calumet took a deep dive into its operations, looking at inventories and the number of products we have, to ensure that we are focused on the right products-the ones our customers want to buy-and that we have plans to manage slow-moving and obsolete inventory. Understanding product life cycles is critical to controlling costs.

Schwindaman agreed that managing costs is becoming even more important. Over the last 10 years or so, Lubrication Engineers has begun to put additional attention into reducing costs through changes in raw material and finished goods inventory management and plant efficiency initiatives. LE has also implemented a plant lubrication reliability program that has dramatically improved equipment efficiency and minimized maintenance downtime.

It seems that the effort has paid off. These things are critical to plant operations, as it has allowed LE to maintain its finished product pricing longer than most and become even more competitive in the marketplace, Schwindaman boasted.

Customer service has become an important criteria in the industry and often factors into a companys choice of supplier. We are in a very competitive business, and to succeed, we need to deliver on time with consistently excellent product quality, said Gill.

Calumet works to anticipate customer needs and have the right products available on-test and at the right time.The demand for customer service requires manufacturers to operate in a more fluid direction with multiple levels of flexibility.This flexibility means we must continuously be connected to the sales organization and understand the plan for future products being developed through marketing.

Quality products arent made or delivered in a vacuum. Skilled employees are needed in every phase of operations. Many sources noted that the lubricants industry has recently lost some experienced personnel, putting a strain on resources.

As the labor force changes and equipment becomes more automated, we have to rethink what our labor models and cost will look like, Weeda noted. We have seen great success with our apprenticeship program, but we cannot get complacent. The unemployment rate and what types of jobs the next generation is looking for are two key hurdles we have to overcome.

Gill added, Developing the right skills allows manufacturing processes to run smoothly, minimizing product defects and maintaining quality while also improving efficiency. An emphasis must also be placed on transfer of knowledge from highly tenured and skilled employees, such as our master blenders, because much of their knowledge is undocumented and relies on past experiences rather than just processes or procedures.

Understanding trends in the industry and managing the change those trends will bring is critical to success, sources noted. This not only includes investment in facilities, such as adding efficient and modern packaging equipment, but also in software to better understand the business and manage the transactions that take place each day.

But investment must go beyond the boundaries of the plant. Companies also emphasized the importance of being a good neighbor and operating in partnership with the local community. By participating in chamber of commerce and economic activities in the region, the community recognizes the company and understands we are a vital business for the region, Schwindaman commented.

Keeping Lubrication Engineers facility looking clean and encouraging employees to get involved in the community, such as participating in reading programs for elementary school students, also contributes to local residents view of the company as a good neighbor, he said.

A successful business must maintain its reputation both within and outside of the industry.

Steve Haffner is president of SGH Consulting LLC. He has over 40 years of experience in the chemical industry, primarily with Exxon Chemicals Paramins and Infineum USA. He specializes in engine oil formulation and marketing. Contact him at or 908-672-8012.

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