Brenntag Supplement: Customer service is paramount

19 March 2012 00:00  [Source: ICB]

As the market-leading chemical distributor, Brenntag forms a vital link between chemical producers and chemical users. Its aim is to be a "one-stop shop", where customers can obtain all the chemicals and services they need, both for specialty and industrial products.

chemical checks,

 The company is planning to roll out more investment in technical laboratories

To deliver this, Brenntag emphasises its technical and operational expertise, its extensive contacts with customers and its understanding of their needs. It has made and continues to make large investments in technical and laboratory facilities in its key geographic markets and product lines, and optimizes its extensive base of warehousing, blending and formulation, and packaging facilities.

Well-qualified technical experts and well equipped application centers are key to Brenntag's success in this area, explains Karsten Beckmann, the chief operating officer for Brenntag Europe.

"We also have a lot of technical sales people on the ground, working with customers at the technical and service level. As we move increasingly into specialty distribution, this capability will be further enhanced," he adds.

Brenntag is planning to roll out more technical laboratories and upgrade existing ones to create centers of excellence across its European operations. For instance, it is upgrading its rubber-chemicals technical services facility in Turin, Italy, right now, and is investing to upgrade its facility in Poland, which will act as a center of excellence for Brenntag's animal nutrition business. The recent acquisition of Multisol in the UK will add technical expertise in the lubricant-additives sector.

Sharing knowledge effectively across a complex organization such as Brenntag's is a "key challenge", says Beckmann. "We have to ensure our sales managers are aligned across Europe and communicate effectively. We have a lot of people with application knowledge and are hiring more now to ensure we have the right people - often we have to go to the producer sector to find the right levels of skills."

In terms of operational excellence, the emphasis in Europe, explains Beckmann, is to make the most of the extensive base of existing assets, which Brenntag has built up over the years, largely through acquisition. This involves selective investment to establish modern centers that can act as hubs in a decentralized network of local facilities. "We are now setting about establishing a cross-border network in Europe, to ensure we serve our customer base as effectively as possible."

GREEN LINE TAKES OFF

A further initiative that has begun in Europe is a new focus on meeting the growing customer demands from Brenntag for environmentally friendly products with the backing of clear life cycle assessment (LCA) information. Brenntag has called its initiative in this area Green Line, and is now marketing products under this banner in four key areas: personal care, cleaning, water treatment and coatings and construction.

"We began formulating this offering one year ago and are now rolling it out right across Europe," says Beckmann. "In this respect, we are working with suppliers to obtain all the necessary information and are acting for our suppliers in putting this into the marketplace. We can do an important job in terms of market penetration for our suppliers, especially with smaller customers."

Beckmann sees the move to green chemistry as an important trend in the industry, and one that is going to grow in future. Green Line, he adds, fits well with Brenntag's goal of organic growth because it sees a greater appetite in the market for new and existing products backed by LCA credentials, stimulated also by increasing regulations.

US PERSPECTIVE ON CUSTOMER FOCUS

Customer focus and service is also paramount in Brenntag's North American operations. William Fidler, president and CEO of Brenntag North America and a member of the management board of Brenntag, explains that clear communication regarding market information from customer to distributor to supply partner is imperative.

"It's an essential skill set that gives us the ability to monitor our service to customers, as well as the service from our suppliers. In addition, it helps us to identify new value-added service opportunities or requirements," explains Fidler.

The information flow is managed via the company's extensive sales and marketing team, customer relationship management tools, applications labs and an integrated strategic sourcing capability.

Technical service capabilities are a growing necessity for anyone competing in the specialty chemical distribution sector, notes the CEO. "As more customers look to outside service providers to assist them with application and technical problems and opportunities, and [as] more suppliers and principals restrict access to their technical resources to their largest customers, the opportunity for Brenntag to provide value-added technical service continues to expand," notes Fidler.

It is for this reason that the company continues to invest in application laboratories and technical-support capabilities not only in its home-base of Europe, but also in North America, Latin America and Asia-Pacific.

"The tech service requirements for industrial chemicals are not as significant as the specialty chemical sector, but are still critically important from a quality-control perspective," points out Fidler.

Additional investments in application laboratories and tech support in markets like the food, personal care, construction, and oil and gas industries enable the company to provide solutions to customer problems and assist in formulation development.

"We launched a Brenntag Solutions Group in North America five years ago to provide technical sales and service capabilities in support of exclusive specialty chemical principal relationships," says Fidler.

The company has expanded this concept to the UK and intends to do the same in Latin American as well.

"Brenntag's mixing and blending capabilities continue to grow in response to a significant increase in demand for unique product formulations that customers prefer to outsource," points out the Brenntag North America CEO.

"We continue to differentiate ourselves through an intense focus on customer service, the expansion of the only national specialties business in the US, the continued pursuit of the rapidly growing global account arena where we have no real peer, strong leadership in the rapidly evolving natural gas and oil business, and successful integration of acquired companies such as G.S. Robins," says Fidler.

And he says that as the North American chemical industry continues to consolidate, it creates multiple opportunities for more exclusive product line development in the specialties area.

"We have an active acquisition candidate pipeline and a successful track record of acquisitions supporting our organic growth that puts us in a leadership position in the distributor M&A field," he says.

Growth

INTEGRATION PROCEEDS RAPIDLY IN ASIA-PACIFIC

The Asia-Pacific arm of Brenntag started operations out of Singapore in October 2008, following the acquisition of the southeast Asian distribution network of French chemicals producer Rhodia.

Operations have since grown substantially, the company having bought EAC Industrial Ingredients and Zhong Yung (International) Chemical, selected for their reputation, network base and standing as a player in the region.

Profitability of the regional operations is expected to continue growing at an annual double-digit pace.

"We are fast growing, we have a fast execution plan, and a pragmatic way to achieve execution and integration. It could be perceived as aggressive," says Brenntag Asia-Pacific operations CEO Henri Néjade.

"Our ambition is to be the leader in the Asia-Pacific market. We [already] have a reasonably good size in the market today," he adds

Néjade describes the group's Asia-Pacific operations as still "a small baby in the Brenntag world", but one that has a very dynamic and vibrant prospect given the region's economic strength.

"Asia-Pacific is an enormous market for chemical distribution. It is growing probably a few points more than normal GDP. As a global player, we cannot ignore Asia-Pacific," the Brenntag executive says.Recognizing the region's diversified culture, the company emphasizes adaptability in picking the companies that will help achieve its goal of understanding the markets better.

"We have to be careful and we have to manage this diversity of culture. We should have the capability to adapt the way how we work with local culture," explains Néjade.

Identifying targets for acquisitions in the region takes years of study to ensure that the new companies fit well with Brenntag's operations.

"We are very active in every region but the interest of Brenntag is to do the acquisition at the right place with the right people in a growing market," notes Néjade.

The company has a good pipeline of acquisition targets, he says, but the process of selecting the best candidate takes time, taking into account the usual complexity of the integration process that follows every successful purchase.

With EAC, Brenntag has combined its own existing networks with EAC's regionally experienced employees and country organizations. Information technology infrastructure also had to be harmonized.

Brenntag takes a long hard look at potential projects before pursuing an investment, but is ready to jump at an opportunity when it comes along - as it did in 2008, with Rhodia's southeast Asian distribution network, Néjade says.

"Our main objectives [in doing acquisitions] are geographic coverage, gaining efficiencies from the existing managers in the companies that we buy, and bringing good talent and regional competency into our organization. At the same time, we want to develop new product portfolios and build relationships with suppliers," he says.

Its most recent acquisition in the region is a 51% stake in Chinese solvents-focused distributor Zhong Yung (International) Chemical, with an agreement to acquire the rest of the company in 2016.

In that five-year span, Brenntag Asia-Pacific hopes to look closely at how best to serve the Chinese market.

"We have five years to organize the right integration and the right investment in China with our partner," says Néjade, adding that the interval to full acquisition will give Brenntag an ample learning curve to understand China's complex market and culture.


Author: Ivan Lerner Pearl Bantillo



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