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Arkema President & CEO, Tony O’Donovan, joins Knowde to share his insights into how leveraging digital investments allows Arkema to address market volatility while anticipating customer needs.
Read the transcript.
Ali Amin-Javaheri: Hello and welcome again everyone. I’m your host, Ali, CEO and co-founder of Knowde, the leading Digital Customer Experience Platform for chemicals and ingredients. Just as a reminder to everyone, our goal with this series is to share the perspectives you need to navigate the changing landscape of the industry, especially when it comes to digital.
We’ve had a number of amazing guests, and I’m thrilled to introduce the latest one, Tony O’Donovan, President and CEO of Arkema, Inc. Arkema, as you know, is a leader in specialty materials, structured into three complementary segments of adhesive solutions, advanced materials, and coatings.
There is an ever-growing demand for innovative and sustainable materials, and Arkema is one of the best at what they do in addressing the global trends of today and for the future. I’m so glad Tony is joining us to tell you a little bit more about their story. Tony, welcome. Thanks so much.
Before we jump in, is there anything that I may have missed that you wanna share about yourself or Arkema?
Tony O’Donovan: Thanks Ali. I think you covered it pretty well. I mean, obviously it’s a global company, like you said. I’m in charge in terms of my role here in North America, in charge of the North America business, which is just a little over one third of the business. But we are truly a global company. And you hit it, right? Our purpose is bringing sustainable solutions to the world that needs them and we do that in the form of our specialty materials.
Ali Amin-Javaheri: Awesome. Ok so we typically ask everyone the same three questions, and these are the questions that our audience cares about the most. Let me just jump right in. We’re seeing more and more suppliers increase investments in their digital capabilities, especially as it’s related to customer facing initiatives. I mean, historically it’s been a lot of initiatives around supply chain and manufacturing and so on, and the digital transformation is now starting to move to the front of the house.
What are some of the big opportunities that you see for Arkema when it comes to this space?
Tony O’Donovan: So I would say there’s a few opportunities right now. We’re focusing a lot on really trying to make sure that we work with customers to make sure that doing business with them is easy, right? So one part of it is purely the transactional side, being able to place orders, one click orders, being able to track your orders, being able to make sure you know what’s coming.
Other ways we can make their lives a little easier too is also to have more information about our customers to do some more predictive forecasting for them to be able to, instead of relying on them to say, “Hey, we need this source of values on these days,” to be able to reverse that and reach out to them to say, “We think you need this in this time, please confirm.” And that helps everybody because we’re able to feed that back into our digital systems in our operations to be able to at least have a predictive model of where we’re going and be able to make sure we have a supply chain lined up to feed it. We’ve had a lot of supply chain issues over the last few years, and obviously this helps us to make better predictions and avoid having issues and we can make sure we maintain the excellent customer service.
The other thing was really just an ability to sort of interface with our customers, to be able to let them know more about our products. There’s a lot of e-learning. The first step is e-catalog, they want to learn more about the product because most of our value we bring to the customer is more in the discussion and more in the technical support piece. It really helps that they already have engaged in and understand a little bit about our products before we get to that step.
Ali Amin-Javaheri: I always assume that I was fairly dialed in on all the different digital platforms of the industry. Did I hear you correctly in saying one click re-ordering? I didn’t know you guys had that capability.
Tony O’Donovan: Well that’s definitely an area where in certain areas of the business we’ve been piloting and we would like to extend that. Obviously there are different ways of doing it. Clearly being a bulk supplier, you can retake levels and order automatically, but one area would definitely be for some of our more customer facing businesses is to make sure within our distribution network we have the ability to order directly out of inventory and availability to be able to get progress there. So that is definitely an initiative that we’re working actively on.
Ali Amin-Javaheri: Got it. You also mentioned being able to support customers and being able to explore your product catalog and just learn more about the products and then being able to engage them. Have you also thought about whether that engagement after they’ve found the right product or solution can happen online?
Tony O’Donovan: There is a certain element for that. Clearly if we’re facing a lot of customers as they’re looking at our products, we’re able to also learn a little bit more about our customers and be able to direct a little bit more of our marketing directly towards them as well. So we’re able to engage with them on that area. It depends on the application though. Many of our products are very, highly technical and actually interacting with our customers needs to make their applications more sustainable. So that requires a little bit more sophisticated interaction, which we’re not quite at that point to be able to deliver. But what we want to do is really come in with some ideas of how we would help the customer before we start that first engagement.
Ali Amin-Javaheri: Got it. Have you guys also invested in digital sellers or inside sales teams?
Tony O’Donovan: We do have and again, it depends on the business, how heavily invested we are in that area, but absolutely we do have that. Typically for the more big B2B customers where we have fewer customers and larger accounts that doesn’t really pay back, we tend to go more traditional, but we do have some other businesses – we’re customer facing, with multiple customers for more volumes, where that pays dividends.
Ali Amin-Javaheri: Yeah, I mean we’ve certainly heard that customer expectations are just changing in the industry. A lot more need for responsiveness and access to information. Sounds like you guys have certainly been hearing the same thing. Are there any other customer expectations that you guys are actively trying to make sure that you meet?
Tony O’Donovan: Well definitely, yeah, like you said, being able to track orders and being able to access our customer portal to see how they’re tracking is important. Other areas that sort of have been hitting us, I mentioned a little bit on supply chain, is to be able to also track back some of our supply chain back. You know, we’ve had recently in the US for instance, import controls on the restrictions in China, for instance, that came out of the blue. And those are very difficult to handle manually. And we need to rely more and more digital tools to be able to track our supply chains and make sure we’re avoiding risk for our customers. Because there those risks could come at any time and we need to make sure we’re keeping our customers informed.
Ali Amin-Javaheri: Yeah. Got it. Everyone’s desires kind of integrate that front end to all of the backend operations, and I know how challenging it can be just ’cause you’re getting into all these ERP processes. But it sounds like you guys are, I would say top quartile for sure when it comes to all these things.
Tony O’Donovan: Well, we would like to be for sure. I mean, it is not that easy, right? We are a little bit, I would say in progress. We’re a little bit more piloting in certain areas and we’re still looking for solutions because not everything is necessarily, you know, that easy. And a lot of it is business specific, right? Certain things add value. Some things, there really isn’t the return on that investment depending on the business and depending on the application. So we try and evaluate business by business. We’re, you know, looking at certain businesses to pilot and lead the area that we’re looking at in certain areas. And then if that is successful, which businesses it pays off to roll it out to.
Ali Amin-Javaheri: Yeah. Makes sense. As you know, there are some headwinds right now. This year’s not like it was, you know, a couple years ago. As you’re thinking about all these various pilots or, you know, starting to scale up these various projects that you’ve put into place, how does Arkema or you specifically think about balancing these short-term challenges against the long-term investments to technology?
Tony O’Donovan: Well, I think it’s like any other investment, right? You need to evaluate each investment on its merits. It’s the same as we’re investing right now in various capacity expansions, some acquisitions, etc. Digital tools and our sort of infrastructure and operations is part of that suite of investments that we need to evaluate. But clearly part of what we’re doing is upgrading our portfolio and our product portfolio as well as our business portfolio to be more and more specialty focused and providing solutions that our customers depend on. And so we need to get closer and closer to our customers and meet their needs and be a little bit more responsive.
So part of the headwinds is it’s not just dealing with a little bit of the growth changes and the changes in supply and demand, but that introduces a lot of volatility. So we’re able to use digital tools to try and address that volatility so we’re not increasing working capital, for instance, when we don’t need to, and we can use that cash for investment. So we’re trying to, like I said, balance it a little bit. Maybe we push out some of our investments that we would otherwise have been done upfront, but we need to balance that with the growth goals. We can’t push out everything otherwise we can’t achieve our strategic goals as well.
Ali Amin-Javaheri: I’m glad that you think about it that way. I mean, a lot of times folks think that there is not too much payoff in digital investments, and of course it’s on a different horizon, but there is – these are totally aligned with growth and cost savings and everything else. It’s amazing to hear what you just said.
Thank you for your insights, Tony. Everyone loves listening to these informal conversations with folks that are helping shape the industry. Thank you for everything that you do. I’m looking forward to seeing how Arkema continues to invest in all things digital. Any final comments as we sign off?
Tony O’Donovan: Well, thank you for doing this. I think this is a great series. I think it’s great to be able to hear from other companies. It’s definitely a wild west of possibilities that are out there to choose from, and you always get good ideas from listening to other people. So glad we could contribute to the conversation.