Have It Your Way
Also kept in the TMS, which is written in a language called MAGIC, is every recipe ever used by a customer. "So if a salesperson is standing in front of a Budweiser bottling plant wondering what the heck they use in there to clean equipment, he or she can look up what our other Bud plants are using," says Homan. That way, the salesperson has a place to start from and can offer the customer a sample of a formula that's already been tested. The salespeople access the information in the TMS either through their laptops or by simply calling the lab and asking the chemists what kind of samples they should give to the customer. But that will all change soon: ChemStation is updating the system, and soon all salespeople will have laptops and access to a company intranet.
Once all the necessary information has been banked in the TMS, Kathy Hansen and her fellow chemists can begin brewing their recipes. When a recipe is finished and the customer is happy with it, the chemists enter it into the TMS and assign it a number. The ingredients list of the recipes reads more like an interior decorator's notes than a scientific document. Instead of chemical names, the ingredients are all color-coded. Navy, for example, could be a mixture of amine carboxylate and dodecyl benzene sulfonic acid. So a company's customized-soap recipe might look something like this: 5% navy, 20% plaid, 25% green, 50% H 20. Color coding keeps communication between the chemists and the sales force simple when they're puzzling out which ingredients from which samples to include in the finished soap.
The technology kicks in full force when it's time to manufacture the product. The TMS is linked by modem to the 40 machines around the country that make the detergent. Homan invented the computerized machines, called H-700s, with the help of an electrical-engineering professor and therefore paid only about $60,000 for each. The workers in the far-flung plants simply touch the number on the H-700 screen that corresponds to the recipe they need mixed, and--voilĂ--the machine's computerized cylinders, which are hooked to several tanks of raw materials, squeeze out the exact amount of each ingredient. "The technology allowed us to recapture the money we'd been losing doing things the old way," says Homan.
When the product is ready for delivery, a ChemStation employee drives the concentrated mixture to the customer site, where a reusable tank has been installed in an accessible location. The driver pumps the mixture from a container on the truck into the customer's tank and then leaves--the customer doesn't even know the driver has been there.
That "prescient delivery" system requires ChemStation to monitor its customers' usage patterns closely. A salesperson periodically visits each site to see how much of the product is left. He or she notes the soap level in the TMS and, when it's low, requests that a new batch be delivered. After a while a pattern emerges, and the salesperson doesn't have to check up on the levels any longer. For its customers with "critical usage" cleaning needs, such as food-processing plants, ChemStation hopes to implement a totally computerized system soon. The system will include a device installed directly in the customer's tank--actually the guts of a cellular phone attached to a float--that will automatically dial in to the TMS and set off an alarm when the detergent is running low.
Of course, catering to customers' every whim can have its drawbacks. Take, for example, the trouble a saleswoman recently had with a truck-cleaning service. The customer was so insistent on spending no more than $3.25 a gallon on soap--an almost impossibly low price to meet if you're talking about a top-quality product--that ChemStation saw its profit margin on the sale drop precipitously.
Overall, though, that's far from the case. Homan claims that about seven years after he began mass customizing, in 1985, his gross profit margin per customer jumped to nearly 50%. Moreover, ChemStation's cost per customer has fallen nearly 25%. That all adds up to some very impressive margins: of the $25 million in sales the company did last year, about 10% went toward straight profits.
Additionally, ChemStation has managed to lock out its competition when it comes to current customers. No one--not even the customer--knows what goes into each formula--except, of course, for the ChemStation chemists. Which makes it impossible for a customer to jump ship with the expectation that another manufacturer will be able to duplicate its beloved suds. Homan says some states do require the ingredients to be listed on the container, but even then the precise combination is kept under wraps. ChemStation will make an exception only for emergency situations. "Other than that, we tell them it's secret," says Homan. "We're not as protective as Coca-Cola, but we're close."
Still, perhaps the most remarkable outcome of the company's mass-customization efforts is its efficiency record. Today, thanks to Homan's technology investment (about $2.4 million), the company can make the custom soap and deliver it in the same amount of time it used to take to make huge batches up front and ship smaller quantities to the customer. All that, from a man who basically stumbled onto a concept that seemed antithetical to soap. "We were just trying to save money in the beginning," says Homan. "Mass customization was the furthest thing from my mind."
Sarah Schafer, a freelance writer based in Washington, D.C., was formerly a staff writer at Inc. Technology.
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