Packaging aerosol products may seem like a rather unglamorous business, especially in today’s New Economy, but the way CCL has practiced it over the years has won the firm wide recognition and strong growth over its almost-50 year history. At the core of the company’s success is the view that stakeholder relationships are vital corporate assets that should be nurtured and grown over time. Such a view, in fact, makes it seem that CCL was practicing Customer Relationship Management well before the term was popularized. After reading this article, and getting an inside look at how the company manages its relationships, it will be easy to understand why CCL is such a leading practitioner of Customer Relationship Management.
CCL Industries was founded in Toronto in 1951 with a single production line and three people packaging aerosol products, which was then a new technology. Today the firm has sales of $1.6 billion, employs approximately 7,500 people and according to The Globe and Mail’s Top 1000 survey of July, 2001, it is the 112th-largest company in Canada. CCL’s customers are well-known consumer products companies such as AstraZeneca, Clorox, Dow, Gillette, Nabisco, Playtex, Pfizer, Procter & Gamble and Unilever. This article discusses CCL’s approaches to relationship management and focuses on the Custom Manufacturing Division, which accounts for about half the company’s sales.
RELATIONSHIPS ARE IMPORTANT
Relationships at CCL have long been a way of life and part of the company’s culture. The company’s founder, Gordon Lang, recognized almost 50 years ago the importance of adopting a long-term view for stakeholder relationships and managing these relationships fairly and effectively. He accepted that this approach would sometimes be to the short-term disadvantage of the company. For example, CCL has often helped suppliers faced with rising costs, by renegotiating long-term contracts; in return, the firm has benefited from increased loyalty and stable sources of supply. Lang’s early views on fairness in dealings with all stakeholders— employees, suppliers, customers and shareholders, and even competitors—have been incorporated into the culture of CCL. Current management continues to take the view that the end-customer relationship will be stronger if relationships with all other stakeholders are also strong.
Today, CCL’s management sees relationships as vital corporate assets that should be nurtured and grown over time. CCL’s strategies for achieving this are to work collaboratively with customers in the identification and creation of new, customer-specific value, as will be discussed shortly.
STAKEHOLDERS ARE FAMILY
Companies with a family orientation to operating a business, whether or not they are actually family-owned, are more likely to have stronger stakeholder relationships than others. CCL Industries Inc. is a publicly listed TSE company (symbol: CCL) and continues to be controlled by the Lang family. Even as the company has grown, the firm has been able to retain a family-like culture. This family culture may be characterized as egalitarian and team-based; it encourages new ideas and holds people, plants and divisions accountable. The behaviour of stakeholders suggests that they value this orientation. Employee turnover is low, and many managers have worked with the firm for over 15 years and have been promoted from within. Plants with similar capabilities share new ideas and do not compete with one another. It is not unusual for staff to nominate family and friends for possible employment. Suppliers work closely with CCL, as CCL does with its customers, where trust allows the piloting and launching of new products in a secure environment of strict confidentiality. Many purchasers view CCL as an extension of their own manufacturing facility, rather than independent owners and operators.
CCL categorizes customers by purchasing behaviour and the value they expect. Thereafter, CCL treats each relationship uniquely and lets the customer define most aspects of the relationship. For example, CCL’s focus in packaging personal-care and household-consumer liquid products is to work most closely with large customers that buy significant amounts from the firm; are shifting towards technically sophisticated products and away from commodities; and expect technical assistance. CCL then characterizes these firms according to their specific needs. For those customers who concentrate on marketing rather than production, CCL encourages them to let it handle logistics and production, from purchasing raw materials and packaging, warehousing, quality control, filling and shipment of goods. Customers that only want pilot production of new formulations receive CCL’s technical, and other, services tailored to this requirement, such as regulatory assistance with the U.S. Food and Drug Administration and Canada’s Health Protection Branch. These services let customers get new products to market quickly—in many cases faster than had they used their own in-house plants—while deferring capital investment in large-scale production facilities until the viability of the concept has been proven.
In some cases, customers are not large enough to sustain the ongoing commitments of technical and other support from CCL and may be better served by one of CCL’s smaller competitors. In cases such as these, CCL helps the customer find a supplier who can handle the requirement and assist in the transition of the business to these companies with minimal disruption to the customer.
CCL also provides individual employees with unique value. For example, people who want a promotion and demonstrate the drive and commitment to succeed, receive annual competency assessments focused on goals and the setting of objectives, leading to the identification of skills requirements. Employees can then pursue relevant training such as leadership or computers.
BONDING OCCURS AT MULTIPLE LEVELS
Relationships between CCL and its customers used to be principally between CCL’s president, senior management or sales staff and executives at customers’ firms who had similar titles. Today, relationships are built between CCL and the many people who make the customer’s business decisions, such as executives and staff at various levels in financial, marketing, engineering, information technology and operational areas. CCL locates the people within the account who make the key business decisions and then collaborates with every person to create the value each wants. To date, CCL has not placed its own personnel at the customer’s premises full-time or part-time, believing that much of the benefit of so doing can be realized by using more traditional approaches to account and project management.
COMPETITION BETWEEN PRODUCTION FACILITIES IS MINIMIZED
Because some of the firm’s plants have similar capabilities, the potential exists for facilities to compete with one another. CCL tracks plant profitability and quality, and awards production to plants that score well, but discourages overt competition. This competition is minimized in a variety of ways including organizational disapproval, rewarding plants not only for their own performance but for the performance of all plants within a division, and recognizing outstanding ideas through the publishing and sharing of best practices.
PROCESSES ARE INTEGRATED WITH CUSTOMERS
CCL has integrated many planning, project and operating processes with its customers’ own processes. To illustrate, CCL’s planning processes include a joint business review with major customers each year. CCL and its customers share market and other intelligence to help improve market planning and to assist CCL in making equipment acquisitions, streamlining processes and instituting new performance measures for mutual benefit.
CCL and its customers integrate project processes for shared cost-reduction teams. These teams comprise personnel from customers and CCL and seek to identify costs that can be eliminated or reduced. One recent change resulted in chemicals being purchased in bulk rather than in drums, which reduced the cost of the raw materials but also required a capital investment in bulk inventory storage and handling equipment. The team worked together to identify the opportunity and allocate cost-sharing between CCL and the customer.
CUSTOMER-FACING TECHNOLOGY DIFFERENTIATES
CCL has invested heavily in enterprise resource planning software that enables the firm to engage in e-commerce with its customers. The system is open and provides much information of interest to customers in real time, such as the status of orders and production, inventory levels, and even the time when the truck has left the plant with the customer’s goods.
CCL is strengthening its capability to interact with customers by using an e-commerce portal. It believes that some of its competitors, especially less well-capitalized firms, will be unable to make the transition rapidly to e-commerce. Technology investments such as these are not only giving customers the power to interact with CCL as each wishes, but are also differentiating CCL from its competitors.
The company has not invested widely in technologies such as call centres, data warehouses, data mining or sales force automation. It continues to examine such areas to ensure that any investment would create financial advantage for both customers and shareholders. CCL believes that companies that sell to other businesses, as it does, must focus first on maintaining and building personal relationships with customers to identify and create new business value. Technology that can add value to these processes will receive priority for investment but will generally not be seen as a substitute for bonding between people. In short, CCL is committed to using technology to increase the effectiveness of new value creation, not just to reduce the cost of its processes.
RELATIONSHIP GOVERNANCE PROCESSES ARE IN PLACE
CCL’s Custom Manufacturing Division has established processes to govern aspects of customer relationships. For example, the firm informally researches customer expectations that drive the relationship and establishes processes in a number of areas to support specific relationships, as previously noted—or more generally, such as remedial processes to rectify errors. For instance, when something unsatisfactory happens, such as an unmet production schedule for reasons beyond the company’s control, CCL seeks to identify the root causes quickly. Senior executives can be deployed to interact with the customer, draw the situation to their attention and recommend corrective actions.
MEASUREMENTS BASED ON PROFITABILITY AND RESPONSIVENESS
CCL’s Custom Manufacturing Division measures the volumes and profitability of customer relationships and the division’s responsiveness, determined through appropriate measures as well as a careful monitoring of customer complaints. Complaints from customers’ customers are generally also provided to CCL and become part of the measurement and continuous improvement processes. CCL makes its production facilities available to its customers to perform audits of manufacturing, quality and other practices, and receives scoring on these factors. Results of these audits can be translated into actions for improvement and areas of excellence can be identified. At CCL, business is people. The company tries to make sure that each person, whether he or she works for customers, CCL or suppliers, creates the new value individual customers want. Over a period of 50 years, CCL has created a family-like culture and a relationship orientation that employees reflect in their interactions. In a spirit of teamwork, collegiality and joint purpose, employees do what policies and procedures cannot dictate and what technology cannot easily accomplish. They work collaboratively with one another and with customers to identify and create new and enduring customer value. They have been cross-trained, know the entirety of the business and function well in the flat organizational structure that characterizes CCL. Importantly, they feel that they are members of the CCL family.