ChemCentral Corp., Bedford Park, IL, is the world's largest privately held distributor of industrial chemicals with annual sales of more than $880 million. The company targets five key markets: adhesives, caulks and sealants; coatings and inks; household, industrial, and institutional cleaning; personal care and cosmetics; and rubber and plastic compounding.
In 2002, the company implemented a new business plan designed to expand and enhance the company's focus. This strategy, termed "Regionalization," includes setting up regional business centers throughout the country, where the company has regional management for sales, finance operations, customer service and purchasing. District offices are located in Chicago, Atlanta, Houston, Cleveland and Los Angeles, and include district sales management, plant and inventory management, and field sales groups.
"We are very pleased with the way our Regionalization efforts have gone," says William R. Hough, senior vice president-director of Marketing. "The results have been seen in any number of areas with efficiencies and higher competencies in virtually everything we do. Customers have seen improvements in our ability to manage inventory by utilizing our extensive "Hub-and-Spoke" network that allows us to dip into inventories for other plants in and around the company. Customers also like the more professional Customer Service Centers (CSR).
"With the Regional Business Center concept, we are also able to provide more consistent training for CSR professionals," he says. "Producers like the fact that working with ChemCentral has become much easier. They only have to deal with our Regional Business Center for purchasing and accounting."
Industry Specialists Increase Value
Along with the Regionalization plan, ChemCentral has a staff of market development specialists, or MDSs, for its Adhesive, Coatings, Personal Care, Household, Institutional and Institutional Compounding markets. These individuals are highly trained technical specialists who perform product management, training, and new product development functions. MDSs have come from supplier companies or out of ChemCentral's own field sales force."We like to find people for this position that have a real strong interest in helping people to find solutions," Hough says. "Helping customers find solutions is our goal."
The company has even started a new focus on sales with a group of sellers dubbed the Solution Sales Executives, or SSE. The SSEs are focused on working with very large multi-location and multi-national customers, where the company can take advantage of ChemCentral's international capabilities along with its minority relationships, inventory management experience, or anything else that can bring value to the customer.
Adapting to a Changing Industry
Distributors face a number of challenges in today's market, including price increases from raw material suppliers and the need to maintain inventory. Over the past 10 years especially, suppliers have had to shut down capacity, while demand - and consequently, prices - continues to rise."Much of the shortfall in availability of many products is the result of price push back from the industry," Hough says. "If the producers are not able to earn enough to keep reinvesting in their operations, eventually they will not be able to maintain availability ... The producers have had to shut down capacity. At the same time, demand has increased." Hough believes that the shortages they are facing now could be long felt, and could have a limiting effect on business growth for everybody in the industry.
In addition, the market continues to feel the effects of consolidation of both adhesive manufacturers and suppliers to the adhesive market. As a distributor servicing the adhesives market, ChemCentral has to constantly adjust its product line to reflect changes in technology within the industry, as well as make adjustments in its supplier group based on business spin offs and product availability.
Hough admits that some of the challenges distributors face today are of their own making. "At times we get so concerned about retaining market share that we let our bottom line suffer," he says. "As a distributor, we offer value-added service to both the customer as well as the producer. As a group, distributors may not do enough to promote that value. We help customers and producers save money on inventory, freight warehousing and cash management everyday.
"Success at servicing the adhesives market depends heavily on a distributor's product line and technical abilities. I believe that a distributor must have a wide range of both specialty and commodity products. To support the specialty products, a distributor must have experienced, technically proficient people in the field."
For more information on ChemCentral, phone (800) 331-6174 or (708)594-7000; e-mail wrhough@chemcentral.com ; or visit http://www.chemcentral.com .
