Chemcentral Uses Decentralization To Reinforce Distribution Network
Apr 1, 1999 12:00 PM, By Mary Davis
CHEMCENTRAL Corporation emphasizes company decentralization, a philosophy that has helped it grow from distributing rosin and turpentine when it was established in 1926 to today's claim of being the largest privately held chemical distributor in the United States. Annual sales of the Chicago, Illinois, company are estimated at almost $900 million.
The decentralization philosophy carries over to distribution centers across the United States, Canada, and Mexico, each viewed as an individual profit center overseen by a general manager. The company also has joint ventures with other companies in Central and South America, and in India.
"The advantage of the decentralization is that our distribution center personnel know their local markets, their customers, and their communities," says William R Hough, vice-president and director of marketing. "We have local dispatchers at each site who can expedite orders for next-day deliveries. In addition, the individuals are committed to reliable distribution that involves environmental sensitivity and community concerns, which are integral parts of our business everywhere we operate."
There are 32 distribution plants, one pigment/dye facility, and 28 sales and warehouse locations. "The chemicals we sell target five key markets that include paint coatings and inks; adhesives, caulks and sealants; HI & I cleaning; personal care and cosmetics; and rubber and plastic compounding," says Hough. "Our employees are continually dedicated to providing our customers with the highest level of quality and customer satisfaction."
Comparing the company to a grocery store with many choices available on the shelf, Hough says a variety of products can be ordered at any given time. "We've tried to obtain products that fit with this specialized industry," he says. "We consider ourselves a warehouse for our customers."
Chemicals that will be delivered in tank trailers come into the facilities via rail or truck. Sometimes they are held in storage tanks at distribution centers. At other times they are delivered via tank trailer. The company has storage capacity of 10.6 million gallons nationwide. In addition to the tank trailer deliveries, the company supplies chemicals in intermediate bulk containers (IBCs) and packaging.
The company prides itself on the many long-term relationships it has established with chemical suppliers, a relationship that benefited from the philosophy of decentralization that enables company employees in each office to interact on a more familiar basis with their customers. Interaction at the local level between employees and customers provides an opportunity for not only face-to-face business relationships, but timely and efficient service.
"Many of these relationships have been in place since the company was founded," says Hough. "Our suppliers are leaders in their industry, and the business relationships we have built with these elite Fortune 500 companies illustrate our commitment in providing our customers with the highest quality products."
A corporate accounts division was organized specifically to serve customers that have large multi-plant locations nationwide. Chemcentral provides a central order center at its corporate offices for the processing and distributing of these orders. The function that this department routinely performs readily positions the company to process orders for customers who require high volumes of chemicals. After the orders are received, they are processed and forwarded to the individual distribution centers. For customers who require less volume, the processing is handled at local centers.
In addition, electronic data interchange (EDI) services are available within the corporate accounts department for the fast and efficient transfer of updated certificates of analysis and material safety data sheets. Centralized electronic billing and electronic funds transfer offer additional convenience and cost savings to customers.
The Chemcentral business structure began in 1926 when William J Hough and Halbert Sampson formed the William J Hough Company of Chicago. Hough and Sampson pooled their own personal investments and sold shares of preferred stock to purchase the assets of the Chicago branch of the Columbia Naval Stores. The new company acquired warehouses and trucks in Chicago for the distribution of rosin and turpentine.
The Hough Company, led by William J Hough who had many years of experience as manager of the western branch of Columbia Naval Stores, was profitable from the beginning, says William R Hough, the late Hough's grandson. Within three years of formation, in 1929, the new company was able to look for expansion opportunities. That chance came when several Hough stockholders and C W Dill, vice-president of Columbia, acquired the assets of the Thoerner Manufacturing Company in St Louis, Missouri. The acquired company was a business similar to The Hough Company and a good candidate for expansion. This new company became the Dill-Hough Company, establishing a St Louis presence for The Hough Company. Richard T Hough, the senior Hough's son, provided leadership for many years. He continues to serve on the company's board of directors. In 1980, the name Chemcentral was chosen to establish national recognition and to bring all divisions of the company under one banner.
Today, with commitment to customer and community established, it follows that the company would emphasize safety practices, says David D Beattie, vice-president of plant operations.
Chemcentral adheres to the management practices codes established by the Responsible Care organization, a program of the Chemical Manufacturers Association (CMA). By adhering to the codes, the company continually improves safety programs and addresses concerns arising from the public.
The distribution code includes subjects on risk management and incident reporting; regulatory monitoring, communication, training, and internal compliance reviews; carrier safety; and packaging, loading, unloading, storage, handling, residue disposal, and external compliance reviews.
To meet the Responsible Care and other safety standards, the company emphasizes thorough employee training. All efforts contribute not only to improving safety, but to the effectiveness of the company's distribution network that provides chemicals to manufacturers.
"We have monthly training programs for both our drivers and plant employees," says Beattie. "The instructors cover DOT and OSHA (Department of Transportation and Occupational Safety and Health Administration) regulations as well as company policies and procedures. Because we transport such a large variety of products, it is essential that our employees learn to identify them and understand their properties."
Chemcentral, in keeping with its philosophy of decentralization, delegates hiring to local managers. Prospective drivers must be at least 21 years old and have a commercial driver license with hazardous materials and tank endorsements.
A safety incentive program is used for both plant employees and drivers. Programs are overseen by plant managers at the individual company locations. Although drivers typically do not load product at the Chemcentral facilities, they are trained to perform the function at other companies' loading racks.
"Our drivers are an integral part of our company," Beattie says. "We don't have many problems with driver retention. They are chosen carefully and few are away from home overnight. That makes for a high rate of job satisfaction."
Drivers, who are furnished uniforms by the company, report to work as scheduled, pick up orders, and begin deliveries. The scheduling is simple with little need for radio or telephone dispatching. "For the most part, it is a daytime operation Monday through Friday," says Beattie.
Drivers are at the wheel of new and well-maintained tractors and tank trailers, and are usually assigned to a specific truck. Managers believe drivers prefer having the same power unit to drive and take pride in its upkeep.
The company operates a fleet of 100 tank trailers and 180 tractors, the latter also used with the 140-van fleet. For-hire carriers are utilized occasionally, but 95% of the transportation is conducted with Chemcentral vehicles and drivers.
The latest tank trailer additions for the fleet are from Acro Trailer Company. The DOT407 four-compartment trailers have a 10-inch pitch to the center. "The double-conical trailers really help in the elimination of most heel," Beattie says.
The majority of the trailers have four compartments. Two compartments have 2,500-gallon capacities each, and the two others have 1,000-gallon capacity. They are equipped with Fort Vale pressure/vacuum vents and Betts valves. Lights are from Betts and include mid-span turn signals for added visibility.
Although the trailers are not required to have vapor recovery, all new vehicles come equipped with Civacon components. "Some of our customers require it," says Beattie. "The vapor recovery equipment may be used for recovery or for transfer."
For driver convenience, Chemcentral specifies belly-mounted cabinets to hold internal valve actuators. The company prefers the cabinets for protection from the weather and for additional storage space.
Chemcentral also specifies full-length safety siderails on ladders so drivers do not have to take their hands off the rails while climbing.
"We think these things make it easier for our drivers to operate more efficiently and safely," says Beattie.
A Neway suspension system and Meritor axles are part of the tank trailer chassis. The landing gear is made by Holland. Brakes are from Meritor/Wabco. Chemcentral specifies Goodyear tires. PTO-driven Blackmer pumps are mounted on the tractors.
The company uses Navistar International tractors powered by 350-horsepower Cummins engines and specified with Fuller nine-speed transmissions. The tandem drive axle is from Spicer.
All maintenance is contracted with outside shops. Chemcentral provides written requirements, which include servicing every 90 days for the tractors and tank trailers inspected per DOT regulations.
Although maintenance is conducted by contract, some Chemcentral facilities have tank cleaning facilities.
In keeping with the company's goal of local community emphasis, the company provides vehicles to be used in training for police and rescue units. Used tank trailers are sometimes donated to the units for on-going training, says Beattie.
"I think this policy remains true to the vision that the company's founders had over 70 years ago," says William R Hough. "In order to be committed to providing quality service and reliable products, they understood the importance of community relationships. As we enter the next millennium, we will continue to provide quality products, service to our customers, and safety to the communities where we are located. This fundamental principle was a key to the success we had back in 1926 and remains so today."
© 2013 Penton Media Inc.
Acceptable Use Policy blog comments powered by Disqus