Entec was featured in this months Team 1 Plastics “Plastics Pipeline Blog”
Steve Tomaszewski, Senior Vice President & General Manager for Entec Polymers, shares his perspective of the plastics industry.
Team 1 Plastics
What changes have you seen in plastics distribution over the past 10 years?
Ten years ago, the global economy was facing the worst financial downfall since the Great Depression and the manufacturing sector was hit especially hard. Some of the immediate actions within the plastics industry, and manufacturing in general, were to reduce headcount. We saw resin producers drastically cutting their technical and sales resources. The molding community had their resources stretched thin, whether it be an inability to add headcount, or the banks’ unwillingness to offer credit.
As we have thankfully pulled out of the recession, the plastics industry is booming and many companies are experiencing record results and expansions. With this growth, there are still challenges on the molding community. For one, the reduction in force that many producers had in the downturn became permanent. There are not as many technical resources available anymore, nor sales reps to offer personal attention. OEM’s are still working with skeleton crews and require fast turn-around on RFQ’s and little to no lead time for parts. And now there is a trucking shortage, which has made logistics a higher portion of variable costs and a time consuming headache. Plastics distribution over this same period has seen a slew of mergers and acquisitions.
The distribution segment has had to redefine itself as a full-service provider in order for any us to succeed. A successful distributor cannot survive by simply being an “order taker”. Your distributor should be seen as an extension of your business. Technical service that can come to your plant and assist your operators, a local sales rep that knows the needs of your business and the importance of fast answers, as well as a partner that can help navigate the difficult waters of today’s freight carrier shortage.
What changes do you see in the future for distribution?
As we plan for the next 10 years, Entec has spoken extensively with our key suppliers and customers to learn what they need from a partner to grow. Our suppliers are measuring their cost to serve versus their manpower capability and seeing that distribution is now a more economical path to market. By offering a robust technical service department and expanding our sales force, Entec is positioning itself to be the bridge between the resin producer and molder.
The logistics issue with trucking is only just starting. Distributors have to recognize that reliance on third parties is not going to guarantee the service needed by our customers. Entec and parent company Ravago are investing hundreds of millions of dollars in a network of company owned distribution centers. With our own trucking fleets available at many of these centers, we see the ability to control our logistics cost and lead time as a valuable service for our partners.
Investment in headcount and infrastructure are not enough. We must constantly work to remain on the cutting edge of technology streamlined and capable of reacting quickly for our customers. By providing our sales team with real time data in the field, our sales reps will be able to reply faster to RFQ’s and order inquiries. We recognize that you do not have the luxury of waiting.
How can small molders manager their resin purchasing to optimize cost?
Hey, we get it, at the end of the day it is the bottom line that counts. Unless we can help to add to that number, it is hard to see value. There are a few actions that can help save on resin.
Place blanket orders with your distributor. This allows them to buy larger quantities from the supplier and the ability to stock locally and deliver in manageable releases.
Be wary of making spot deals in order to get a quick price reduction. With resin markets tightening, supply assurance is more vital than ever. Molders that are “ratable” buyers will find themselves at the front of the line when allocations are announced and will carry more influence in pricing negotiations.
Work with your local sales rep to find creative solutions such as consignment, volume rebates, or improved credit terms.
There are also many new resin technologies available from producers which can offer processing improvements, reduced specific gravity, or entry into a space you have been unable to penetrate previously. Work with a good technical sales rep to learn more about these technologies and how they may help your business.
The bottom line is that resin distribution has evolved significantly over the past decade. In order to succeed, a distributor must be willing to invest in training top talent, provide skillful and timely technical service, and be able to take the long view when it comes to investing in their logistics and technological infrastructure.