Development
of the concept of external services as advice and support for a company in the paints and coatings sector.
by M.Sc. Ph.D. Julián A. Restrepo R.*
The title of this work paraphrases, in some way, an article published in the previous edition: "Optimization: Key in times of crisis" [1], whose content has seemed to me very appropriate for the current moment of the sector and in general of the economy: It is clear that the sector of paints and coatings has been greatly affected by the increase in the price of the dollar, which has led to an increase in the devaluation of local currencies against foreign currency, causing a progressive increase in the cost of raw materials (MPs), which are mostly imported. In this work, as conclusions to address the crisis, it is possible to extract:
Optimize operational processes: "The reduction of costs through efficiency in operations: it is essential to analyze if there is any waste that can be eliminated and not only in the process of using MPs, but in production time, delivery transport trips, that is, we have to be more efficient."
Strengthen R&D areas: "R&D teams must work on more competitive formulas, using material combinations more efficiently, to reduce costs, maintaining the quality of products, looking for alternatives of local MPs and raising the cost/performance ratio of their formulations, to make them attractive in the international market".
Thus, it is intended to make a discussion about how, in times of crisis, it is possible (and strictly speaking, it should be done), to strengthen both the R & D and the productive teams of the companies, not only to achieve more competitive formulas from the point of view of the product, but to optimize the transformation and associated productive processes, which, in many cases, are not analyzed in sufficient detail, so conventionally the paint industry seeks to optimize costs through a cost/benefit review of the components and materials used (call it reformulation or product optimization), but not in the production process itself and if you want, in the overall manufacturing scheme (including Product Design, Marketing and Sales, Finance, Logistics, etc.). To go further, the advantages of using the "Outsourcing of knowledge processes" (EPC) scheme are analyzed, as a way to optimize resources and maximize the chances of success in achieving results.
To reflect: Some historical and current situations
I will take the liberty of raising some previous reflections, to address with sufficient illustration the point I want to address:
The concept of "Total Football": Recently the football family has had an unfortunate loss with the death of the legendary Johan Cruyff1: The Dutch striker passed away last March 2016, at the age of 68; he could boast of having scored dozens of goals (almost 250 with Ajax and 51 with FC Barcelona). However, even today, there is one that is still in the retina of many, the so-called "impossible goal"2 (See Image 1) [3]. But the importance of Cruyff's legacy is based on the fact that he was the most famous exponent of the philosophy of "total football", developed by the Dutchman Rinus Michels (died in 2005), Coach and mentor of Cruyff [4] (and in some ways, his father figure).
"Total football" is a game system used in football, in which a player who moves out of position is replaced by a teammate, allowing the set to retain its tactical structure. In this fluid system no footballer has an assigned role, so, in other words, any player must perform well in any position on the pitch (thus, a player can be a striker, midfielder or defender) [5].
The "War of the Tails": In the so-called "war of the tails" of the 70s-80s, between Coca-Cola and Pepsi there is a fascinating story [7]: In 1975 the directors of Pepsi decided to launch a risky campaign called "The Pepsi Challenge". The goal was to demonstrate what the preferred flavor of consumers was: The challenge consisted of a blind test with two equal glasses, one containing Coca-Cola and the other Pepsi, and people had to drink a sip of both glasses and decide which was the drink they liked the most without knowing which brand each glass corresponded to.
The results were surprising: More than half preferred the taste of Pepsi. Pepsi's strategies were so successful that for the first time in Coca-Cola's nearly 100 years, its competitor's sales were very close to its own. In the wake of the results of "The Pepsi Challenge," Coca-Cola executives, very concerned, decided to do their own research, but the results were discouraging: The tests they conducted in their Atlanta offices and with their own employees, resulted in even they themselves preferring the taste of Pepsi. The path seemed to be only one: Change the taste of Coca-Cola. After hundreds of variations and after the transformation of the formula, they finally found a flavor that in the tests was preferred over the old flavor of Coca-Cola and also over that of Pepsi.
Thus, at the end of April 1985 (and having invested more than 4 million dollars), the directors announced that Coca-Cola had been renewed and a new product called "new Coke" was coming to the market.
The reactions were not long in coming, on the one hand Pepsi took advantage of this change and released statements saying that Coca-Cola had changed its flavor to resemble Pepsi. Such was the reaction that a few blocks from where the "new Coke" was announced, Pepsi developed a festival and also gave its employees the following Friday off, to celebrate. On the other hand, consumer complaints crowded customer service lines, more than 5,000 calls a day were recorded, thousands of letters and protests in front of Atlanta offices, cases were known in which users toured supermarkets buying the largest amount of traditional Coca-Cola in order to have enough supply. Even Fidel Castro declared: "the disappearance of the genuine product is a symptom of American decadence."
The failed experiment of the "new Coke" only lasted a little more than 3 months, since the directors of Coca-Cola, seeing the large number of complaints and the reduction of their sales, had to reverse their changes and refound their product, to return to the traditional and that was how the "Coca-Cola Classic" was born. that it was simply the same Coca-Cola they had known from the beginning. The news was such that the ABC network interrupted its programming to give the news live, in addition the news was on the cover of the main newspapers in the United States.
Ironically, the drink that had lost market to its competitor, began to recover it, reminded people that Coca-Cola was more than just a drink, it was a symbol. Such was the success of returning to the "Coca-Cola Classic" that that year Coca-Cola obtained a record in sales, so much so that it represented its CEO, Roberto Goizueta, a salary bonus of 5 million dollars despite the fiasco of "new Coke" 3.
Lionel Messi's style of play: In another example of football, on the internet I found a moving poem read as the setting of a video about Lionel Messi: "Messi is a dog, a dog man" by Hernán Casciari [8], in fact I share the opinion of Norberto Jansenson (reader), in which this video exceeds football and has some things that represent us all, so it is worth taking a few minutes to watch: "The video shows a compilation of fragments of plays in which Messi participates, the issue is that the video does not show Messi's goals, nor his best plays, nor his assists, it is a strange compilation.
The video shows hundreds of images, of 2 to 3 seconds each, in which Messi receives very strong fouls and does not fall, does not throw, or complain, does not cunningly seek the direct free kick, nor the penalty. In each frame, he continues with his eyes on the ball as he finds balance. He makes inhuman efforts so that what was done to him is not necessary, nor is it yellow for the opposing defender... Messi's eyes are always focused on the ball... Today's football has a very clear regulation by which, many times, falling to the ground is to secure a penalty, or get the opposing defender to be admonished ... In these fragments, Messi seems to understand nothing about football or opportunity, he is seen as in a trance, hypnotized; he only wants the ball inside the opposite goal, he doesn't care about the sport or the result or the legislation."
The status quo of the paint industry: Understanding the reflection: At this point, we will analyze one by one the examples raised in the previous point, making a comparison with the paints and coatings industry:
The concept of "Total Football": ..."any player must perform well in any position on the pitch". Currently, the best exponents of this philosophy of play are FC Barcelona and FC Bayern Munich4, and although undoubtedly this scheme of play has allowed both teams to be considered among the best, due to the showiness of their style of play, this has not necessarily guaranteed that they always win all the matches, nor always obtain titles (think, for example, in the case of the UEFA Champions League) [9], with which it is said that: "not always wins the best, but the one who understands the game best".
The parallel with the paint industry, rests on the fact that currently many companies seek to reduce, not only the size of their R&D teams, but other areas of the company, with which key and competent personnel end up performing multiple tasks and in many cases it works. That is, we could say that shower companies also have "toderos", which will surely allow them to have a very good capacity for response and compliance with results. But considering the comparative analysis, we know that such personnel can be subjected to a high workload and stress levels, which in the long run, we know, is detrimental to the health of the employee and therefore to their work performance and their family and interpersonal relationships.
Considering an additional reflection, the brain itself is divided into specific areas (functional areas), where each one is specialized in a task and although, we could think that the current labor demands force us to develop in some way all the areas and be good in different fields of knowledge (Finance, Research, Logistics, Management, Teamwork, Direction, among others), we know historically that the great geniuses and great exceptional thinkers have developed more some areas than others5 or in other words, "you can be good at everything a little, but not the best at a specific one". The point is that, considering the current challenges, companies require the best staff in their field!
The "War of the Tails": The fact that the final result of the so-called "War of the Tails" had come out final and paradoxically so well for Coca-Cola, is historically known as "Coca-Cola's Worst Mistake". In fact, some accused them of having planned the entire strategy to reposition the brand, to which Donald Keough, one of the company's executives replied: "Some critics will say that Coca-Cola made a big marketing mistake, some cynics will say that we planned everything, the truth is that we are neither so foolish for one nor so smart for the other."
The curious fact is that, after several decades and many studies, it was possible to discover why if users preferred the taste of Pepsi, they could not surpass Coca-Cola in sales: i) The first reason was in the same taste of the product and how the challenge was realized: the taste of Pepsi is much sweeter than that of Coca-Cola, and the taste buds tend to have more affinity with sweet flavors, for this reason people chose Pepsi as a favorite as long as it was in small quantities, and this was not taken into account in the test, since it consisted of taking a single sip, not taking the whole glass, the bottle or can that is how those drinks are normally taken.
For this reason, drinking a drink as sweet as Pepsi in greater quantity does not produce the same preferences as taking just one sip; ii) The second reason was recently discovered, where the same experiment was carried out, with the difference that this time the consumer if he could see the brand of the drink he consumed, 75% chose Coca-Cola, the reasons are: the history, the brand, the logo and its color, the designs of the bottle, the commercials and all the good memories that Coca-Cola has generated over so many years living with consumers, all these factors produce emotional thoughts that exceed rational preference, which is why most customers preferred Coca-Cola.
But what is certain is that Coca-Cola's big mistake at the time was "to have focused on beating the competition, without really taking into account what consumers wanted."
This highlights the fact that we usually live in many areas of R&D, where we make hasty decisions, with the desire to obtain results or yielding to commercial pressure or delivery times and goal fulfillment, omitting key validation tests or taking for granted the results of tests not performed.
But we must bear in mind that the case of Coca-Cola and its recipe is an exceptional case: The Coca-Cola recipe is not only considered the best industrial secret6 [10], but because it is a very popular mass consumption product, it cannot afford to change its recipe, since any changes are immediately detected by consumers (as mentioned in the example).
In the case of paints, in recent years we have seen how many of the consumers "have forced paint manufacturers to lower their costs", this due, in part, to the increase in supply and an increase in the knowledge of some of these buyers. In this case, what customers want is a good product at a competitive cost, but we observe that the translation of this message for many paint companies is to reformulate the product, to lower costs and this is the traditional approach when it is required to make a product more competitive, even when it is not the only item, although yes, in many cases, the most important. But we must bear in mind that when the customer asks us for a better cost, he is not asking us for a reformulation of the product (in fact I do not think he wants it!), but the interpretation to this need for paint manufacturers is product reformulation, but what about the impact of Logistics, Financial costs, of Production, of packaging material, among others. Although some companies have very successful costing systems, my opinion is that in many cases they have "hidden costs" that are not considered, nor quantified, costs that would make the cost balance decrease for the weight of the materials in the formulation.
In the author's opinion, the worst thing that can be done to a product is its reformulation, not only because of the risks involved, but because of the tests and time required to have the associated validations complete: To mention some "hidden costs": a) Reformulating a product in reality, in many cases can lead to an increase in the cost of other products, for example, for Logistics and inventory issues: A greater number of MPs references may require more storage space; b) it can also lead to a greater consumption of new references of MPs of lower consumption, that is, the number of MPs and the consumption cycle increase (these MPs may last longer in storage); c) for the MP Quality Control area more time is required to complete the analyses of the different MPs; d) and in turn, both for the area of R&D and Quality Control PT (finished product), it may require more time to determine the cause of failure, in case of a claim in the customer or due to internal problems, during the manufacture of the product.
Note: In the next edition we will continue to develop the reflections applied to the paint industry, as well as the topic of outsourcing as an alternative to consider.
Footer:
1. Considered by some, the most influential character in the history of football [2]. In fact, he is considered the third best player of the twentieth century, behind Pelé and Diego Maradona.
2. A goal that undid the draw against Atlético de Madrid, back in 1973, and so much for which perhaps, he earned the nickname of the "flying Dutchman", among many other nicknames [2].
3. Note that in addition, considering the cost of the "Coca-Cola Classic" campaign, the company invested a total of 9 million dollars.
4. From the hand of Josep Guardiola ("Pep Guardiola"), who in turn was a disciple of Johan Cruyff.
5. It is not uncommon to see that a very bright person in a field has a relationship problem.
6. In fact it is claimed that there are only two people in the world who know the secret recipe for Coca-Cola, and because of this they are forbidden to travel on the same plane, eat on the same plate or sleep in the same hotel [8].
* Julian. A. Restrepo R. Consultant of the Paint industry. [email protected] Medellin, Colombia
References part 1
[1] Editorial (Duván Chaverra Agudelo, Editor). "Optimization: Key in times of crisis". Vol. 21, No. 1, 2016
[2] http://www.infobae.com/2015/10/23/1764483-por-que-johan-cruyff-es-el-mas-influyente-la-historia-del-futbol
[3] (a) http://www.abc.es/deportes/futbol/abci-muere-johan-cruyff-201603241341_noticia.html; b) https://en.wikipedia.org/wiki/Johan_Cruyff
[4] https://es.wikipedia.org/wiki/Johan_Cruyff
[5] https://es.wikipedia.org/wiki/F%C3%BAtbol_total
[6] [B] http://www.abc.es/deportes/futbol/abci-johan-cruyff-imposible-holandes-volador-dejo-miles-personas-boquiabiertas-201603241519_noticia.html
[7] (a) http://blogs.elespectador.com/mediamarketing/2013/05/14/el-reto-pepsi-la-guerra-de-las-colas-parte-i/; (b) http://blogs.elespectador.com/mediamarketing/2013/06/12/el-peor-mejor-error-de-coca-cola-la-guerra-de-las-colas-ii/; (c) http://www.marketingdirecto.com/anunciantes-general/anunciantes/coca-cola-vs-pepsi-la-increible-historia-de-la-guerra-de-los-refrescos-de-cola/
[8] (a) http://editorialorsai.com/blog/post/messi_es_un_perro; b) https://www.youtube.com/watch?v=nGmn0jMEcJw
[9] https://es.wikipedia.org/wiki/Liga_de_Campeones_de_la_UEFA
[10] http://www.curiosidadsq.com/2013/11/Receta-secreta-Coca-Cola.html
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