Summer internship 2006 report: function: sales and marketing/operations; to Hi-Tech Birla Carbon, New Delhi

Abstract

Projects assigned for my summers were in Carbon Black business. Carbon Black as the name suggests is a black powdery material produced by the partial oxidation of petroleum oil (commonly referred as Carbon Black Feed Stock (CBSF)). Presently, carbon black is sold in the form of various grades (namely N220, N550 etc.) which are further classified broadly into two categories i.e. hard and soft carbon black grades. These classifications are based on material properties namely particle size, surface area, pallet hardness. (Refer Exhibit 1 to understand the carbon black manufacturing process)Carbon Black is a major input raw material for tyre industries and a major revenue source for carbon black manufacturers. Given the upsurge in carbon black demand in recent months and expected growth in future years particularly in developing countries, it is pertinent on us to gain competitive advantage in terms of retaining and gaining market share by offering a quality product to our customers. While discussing the above issue it must be kept in mind that the crude prices are showing signs of upswing and further hardening in future months. Other options from Middle East, Africa, and Russia can be explored in an industry wide effort; Birla Carbon can take a lead in raising the issue at Carbon Black Manufactures Association, or in Industry forums like CII, FICCI, and ASSOCHAM. Generally, Carbon Black falls under the commodity business category and till date price is the only differentiator or competitive weapon carbon black suppliers have to increase their volume share to drive advantages linked with economies of scale and scope. This approach rightly emphasized costs reduction projects on our side and then increasing margins on the same existing prices. Industry analysts call such strategies as "cost leadership" approach. Also recently, a debate has erupted towards better customer service by ensuring timely delivery and strict adherence to material properties as specified by the customer. A lot of improvement is needed on this front and can be achieved only by the joint efforts of sales and production teams. Some cues can be taken from the GMPD planning and formats that they are using for effective communication. A planning cell having members from production, sales, quality, technical, marketing, logistics, HR, finance can be formed and overall (sales and production) planning will be done coherently in line with the customer requirements. It is suggested that the final authority and responsibility lies with the cell and the cell preferably be located at Renukoot Plant. Similarly, taskforces with different customers can to be formed, Customer Advocates and Champions related to that customer has to be part of such taskforces, the objective should be to understand the customer, basis of order changes, their inventory system and openly sharing problems at our end, the purpose should be to built trust and genuinely use the concept of mutual symbiosis rather than bombastic praise of customer, and our commitment at any cost. A beginning towards this end has already been initiated with JK Industries. The non availability of dispatchable material is a stumbling roadblock in timely delivery, and some fInished goods inventory can be built up by careful planning and with constant communication with customers. (Refer Exhibit 2 to see the recommended minimum grade wise inventory)Branding of carbon black on the lines of Cement, Steel and other industrial products is gaining ground but there are hardly any concrete plans to take this initiative forward particularly in circumstances where we are technically lagging in terms of quality, service and where discounts are the norm of the business. Any branding effort has to be based on a recently conducted market survey/study outlining the major attributes of the target segment(here tyre and non tyre companies). Branding also has an effect on organizational structure, whether umbrella brand is fine, or a corporate linked brand will do the trick and based on that, whether category managers (say Hard Grade brand manager) should be assigned or different brand managers for each brand (or grade) positioned in the marketplace will be the right approach. All these questions have to be thoroughly debated among ourselves before taking any action on the ground. Further, a lot more emphasis is needed in R and D initiatives, projects can be taken based on the results of market study, projects can also be taken jointly with the customer R and D or with educational institutions, and government research laboratories. Industrial branding in a nutshell is a game of technical superiority and extending excellent service to customers, if played well, can give us enough leverage to charge premium on our terms. Other observation is related to people, and the culture that exists in the portals of Birla Carbon. A lot more soul searching is required on the part of Human Resource Department and a workable contingent plan has to be evolved through one on one interaction with employees. A thorough analysis is required to understand organizational culture, and how it can be changed or improved to reflect espoused values at the corporate level. Altogether, the experience gained has both highs and lows and a major learning i.e. "merit is not about getting marks in exams or cracking entrance examinations but something more or much more which I still need to unravel".