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Loctite Corporation

About the company


Loctite is a Chemical company and was

founded by Dr. Krieble in 1953 in the


basement laboratory of Trinity College
Products: Industrial Adhesives, Sealants,
Coatings, Equipment
Sales: Euro 1 Bn (Year:2000)
Customers: Mechanical engineering
personnel with no chemical background

What Differentiates Loctite from


Competition
The main USP of Loctite is the Technical

Support that it provides to its customers.


It not only sells products but acts as a
partner in solving Customers business
problems

The Situation
2 divisions, the TSAE and Loctite

Equipment have been merged


About TSAE
Stands for Loctite Technical Service and
Application Engineering Division
Responsible for providing technical support
to customers
Comprises a toll free number, we-based
support and an Adhesive test lab

The Situation
About Loctite Equipment Division
Sells Standard Equipment as well as
Custom Built Equipment
Main function is to support the sale of
Adhesives, which is the primary product of
Loctite.

The Problem
Despite the implementation of JIT and Lean
Programs, post merger, there has been no
reduction in inventory in the supply chain.

What Led to the Merger


The Loctite Equipment Division was in

shambles
Reps did not promote the sale of equipment
along with adhesives, as they lacked the
necessary equipment service information
The Systems Approach, i.e. selling
(adhesives+ equipment + service) together,
was dying
The aim was to restore this Systems
Approach at Loctite

Problems with the Equipment


Division
Wasteful Practices
Markup Pricing was followed and almost

all equipment was priced higher than


competition
Poor support service to customers
Distributors did not push Loctite Equipment
due to lack of support

Espositos Plan for Equipment


Division
Form a Service Hub comprising multi-

talented people from across the


organization having a flexible working style
Form an Equipment Business Direction
Team(EBDT) consisting of managers from
different functional areas.
Implement Lean Principles to make the
Equipment Division competitive

The Lean Concept


1. Identify value
2. Analyze the value stream
3. Enhance service process flow
4. More pull, less push
5. Perfection

Step 1-Identify Value


Value of Loctite brand
Loctite had a strong brand equity and was the
number 1 choice for many prospective
customers
Value Pricing
The customers were surveyed and street
prices for competitor brands were
determined to determine the optimal value
pricing
The resultant pricing was upto 50% less than
the existing markup pricing

Step 2-Analyze the Value Stream


A) The Supplier-Loctite Interface

Problems:
? Suppliers get little feedback from Loctite
? Cost to Loctite solely dependent on
volumes of
purchase
Solutions:
)Regular communication with suppliers
regarding Loctites inventory status
)Suppliers made a part of product
development and design efforts.

Step 2-Analyze the Value


Stream(contd)
B) Loctite-Customer Interface
Problems:
? No customer support for equipment
Solutions:
Tied bonus of TSAE managers to equipment
sales growth
Dedicated technical support, website and
catalog for equipment.
Training programs for
reps/customers/distributors

Step 2-Analyze the Value


Stream(contd)
C) Distributor Branch Participation
Problems:
? Distributors did not promote/display the equipment
prominently
? Distributor Incentives were based on the inventory
they stocked which increased costs
Solutions:
Certified Equipment Showrooms were promoted,
wherein incentives were based in how prominently
products were displayed
Inventory was shifted from distributors to a central
warehouse

Step 3-Enhance Service Process


Flow
Written procedures were created for

various processes like quote preparation,


order processing and repair requests.
With creation of a service hub comprising
multi-talented people, the turnaround time
of requests reduced

Step 4-More Pull, Less Push


Equipment
Track movement of equipment from

Supplier Loctite Distributor Customer


Reduce lead time and bath size of Suppliers
Information
Storing information, that is required by
many, at decentralized locations
Effective Loctite equipment website for
customers/suppliers/distributors
Customer Needs

Step 5-Perfection
Balancing cost with quality
Making suppliers liable for quality

complaints/annual evaluation of suppliers

Steps to Reduce Inventory


Discounts and incentives to customers
Promotion through sales force/website
Donate obsolete items to academic

institutions
Offer some items to customers for free to
build relationships

Thank You