Extra Cover

Extra Cover

Copyright 2003, Traffic World, Inc.

The growth in outsourcing has encouraged companies to spin off logistics departments as profit centers, but chemical company PPG Industries has taken this a step further through a chemicals management service that encompasses logistics.

This month the spin-off enterprise, PPG Total Service Solutions, based in Troy, Mich., announced it has been awarded management programs at General Motors Corp.'s Wentzille, Mo., Oklahoma City and Janesville, Wis., assembly plants. The enterprise also is looking to expand into other industries.

At each GM site the organization provides full-time, on-site chemicals management staff, including a chemical manager who acts as a single point of contact and supervises the tier two product vendors. The team is responsible for purchasing and managing all indirect chemicals used in the coatings application process as well as developing and implementing process improvement projects.

The service concentrates on the management of "indirect chemicals and product vendors." In the case of GM, this means indirect materials used in the vehicle coating process, such as lubricants, janitorial chemicals and water treatment products. This takes in activities "that are needed to run the facility but are not core to manufacturing what they make," explained Scott A. Follett, global director of PPG Total Services.

Why should a manufacturer such as GM choose an offshoot of Pittsburgh-based coatings company PPG to manage these materials? "Because a lot of the specialty chemicals that are used we make," said Follett. "We developed the chemistries that are used inside those facilities."

In a typical situation PPG Total Services will analyze every facet of a chemical's usage. It will look at the price and compare that to what is available under its own procurement programs, review how it is deployed - for example, whether there is waste through unnecessary repackaging - and how much inventory is held. Supplier consolidation and the promotion of just-in-time delivery are part of the service. Initial savings can range from 10 to 20 percent in the first year depending on the individual application. According to Follett, the organization currently has more than 100 of these programs in place in more than 12 countries.

The enterprise is active in the aerospace, auto and packaging industries "and we are currently developing programs for general industrial businesses," said Follett. The energy sector is on the organization's target list as well, one of the industries where the parent company's core products, industrial coatings, are not used extensively.