Managing all aspects of the supply is crucial to success
Excerpt of M. Diane McCormick's December 2019 Compoundings Article
In today's global marketplace, supply chain sustainability and transparency drive innovation and competitiveness in lubricant manufacturing.
"Innovation is key to market competitiveness in the lubricant industry, and as a result, it's a never-ending cycle of driving for better perform and in the most cost-effective way," said James Eggenschwiler, director of global trade for the Redstone Group.
The global market means more choices but also in an age of uncertainty, a host of complexities. Supply chain professionals agree that relationships with trusted partners are the key to success.
"You have to know which options are the right ones to choose," said Donna Nijak, plant manager for Hill & Griffith Co. "You have to know whether a material's chemistry is the same between different suppliers. You have to [know] how the supplier is going to perform. It's about all the little things. It's a matter of paying attention to detail and making sure you choose partners who share your level of integrity."
Supply Chain Challenges
A functional supply chain in an "ever-changing landscape" is a lubricant manufacturing imperative, noted David F. Richards, chief operations officer at RichardsApex. That "ever-changing landscape" rocks supply chains from multiple directions.
Consolidation and company changes
Following the trail of suppliers as they restructure and merge has been a greater challenge in the few years, said Nijak. "Keeping track of 'who's on first' is how we say it," said Nijak.
The number of players in basestocks "has dwindled over the years," agreed Richards. As names and contacts disappear, "it's important to maintain a presence with those that are still in the market."
International raw material sourcing
A widening global market offers more options — but also more chances for differences in raw materials. If those differences aren't caught and addressed, they can knock the final product out of specifications.
Environmental and regulatory demands
Countless jurisdictions worldwide are constantly updating regulations, heightening disclosure requirements and demanding validation of branding and claims, said Eggenschwiler. Even normal chemical laws can affect a lubricant's market eligibility "if the product contains additives not acceptable in that country," he said.
Lubricant manufacturers must comply with regulations from scattered continents, regions, countries and states, said Richards. "Every geography is different," he said. "Europe is different on both the inbound and outbound sides. Each country within Asia is a little different than the next. Singapore is quite different from Korea, for example."
Catastrophe and politics
Superstorms, floods, embargoes — anything can descend to disrupt the supply chain. "Any time there's a hurricane, that becomes very challenging and scary because shipping can come to a halt," said C. Daniel Boring, purchasing manager for Metalloid Corp. "That impacts us almost every year."
Forging Relationships
A strong supply chain stands on a foundation of relationships, which boil down to each player's integrity, said Eggenschwiler. "Reputation is everything," he said. "When companies start to lose trust in each other, that's a climate where bad things begin to happen. You have to know the market perception of the company you're dealing with."
In the global marketplace, RichardsApex manages relationships in "different languages and unique ways of doing business and cultural influences," said Richards. Language gaps are "usually managed by local partnerships with representatives or stocking distributors. "Having a local on your team takes the variable of language out of the picture, for the most part. Authoring SDSs [safety data sheets] in native tongues is a regulatory necessity."
Strong relationships can provide a sort of advance warning system, helping avert the higher costs that could incur if problems must be rectified at the last minute, Richards said. "If the relationships are good, I like to think we can know ahead of time and work through the challenges or problems we face," he said. "It can be a very positive situation if the vendor is on point and working with you to make sure these things don't catch you by surprise."
Richards utilizes all communications channels in relationship-building — electronic means to "trade information pretty quickly," or face-to-face meetings to convey transactions of a more serious nature. "Over time, you align yourself with companies that have similar moral and ethical backgrounds," he said. "They understand why it's important to us to be on point with all environmental and regulatory affairs, and why changes create problems if we don't know about them ahead of time."
Openness, honesty and communications form the core of good relationships, said Nijak. When mistakes happen, calls are made and the problem is dealt with. In-person encounters through ILMA events help build and sustain trust. "It's as important to allow vendors to get to know you as it is for you to get to know them," she said.
Boring's "good network of suppliers and contracts" give him flexibility in problem solving. "I can always have somebody to turn to if I start having trouble sourcing something," he said. "It doesn't take very long before I can figure out where I need to go to find help."
In the quest for innovation, lubricant manufacturers and their supply chains must guard against pricing pressures that can reduce product quality and destroy reputations, said Eggenschwiler. "You start running into issues where quality becomes sacrificed because of the need for price competitiveness," he said. "Companies find themselves in trouble because they get a reputation for competing on price, so the quality of product might not be as good or as consistent as it used to be."