As a holistic initiative, Clariant Excellence changes and improves the business culture and internal procedures for the long term in an ever-changing complex world and thus brings about regular annual benefits. CLNX is a combination of basic system approaches tailored to specific areas and LeanSigma, a method for improving individual business processes. The LeanSigma approach was conceived at the beginning of the 21st century and combines Six Sigma and Lean Management. Six Sigma was developed in the late 1980s and is established worldwide as a method for increasing efficiency and managing quality based on the core elements of description, measurement, analysis, improvement, and monitoring of business processes using statistical methods. Lean Management helps develop principles, methods, and procedures for efficiently structuring the entire industrial product value chain.
Clariant Excellence is based on four pillars: Operational Excellence, Commercial Excellence, People Excellence, and Innovation Excellence. Since the beginning of 2009, a total of more than 1 900 CLNX projects have been launched, including around 500 in 2011. Improvements worth more than CHF 160 million have been realized through these projects. The goal is to bring about further improvements totaling CHF 60 million per year in 2012 and subsequent years through the Clariant Excellence initiative. After all four pillars have been introduced in the form of individual improvement initiatives, the defined objective is to achieve even more efficient value creation for the Clariant Group and its customers by networking the four areas of excellence with one another.
More than 3 000 employees are already directly involved in Clariant Excellence
Clariant Excellence is being implemented by specially trained staff. The concept is based on defined roles modeled on rank designations in the form of “belt colors” – as used in Asian martial arts. Within three years,more than 3 000 of all Clariant employees have been specifically trained as “belts”, i.e. project managers or project staff, for tasks in connection with the Excellence Program, and entrusted with its implementation within the Group. Süd-Chemie employees will also be included in this process from 2012. Regular surveys are carried out in order to monitor the successes and to identify potential improvements while introducing CLNX.
The four pillars of Clariant Excellence
Operational Excellence focus on efficiency and productivity
In 2009 and 2010 the emphasis of Clariant Excellence was on Operational Excellence and Commercial Excellence, and in 2011 attention was turned to Innovation Excellence and People Excellence. In 2010 the Clariant Production System (CPS) initiative was introduced as part of Operational Excellence, which focuses on efficiency improvements in all operating processes. The goal of the CPS program is to achieve optimum productivity and financial performance in the production units of all Business Units. Once the foundation had been laid in 2010 by introducing CPS at pilot locations, the focus in 2011 was on company-wide implementation. This will also be the main objective in 2012. The goal is to increase productivity by 3 – 5 percent per year by standardizing and continually improving processes.
Clariant also launched the Clariant Supply Chain System (CSS) initiative in early 2011. Under the initiative, the entire value chain from suppliers to customers is analyzed and scrutinized for optimization potential. This will result in further improvements in net working capital, cash management, and service quality. CSS plays a crucial role in meeting Group-wide targets. For Clariant Supply Chain Systems, the specific targets are: improvement in the punctuality of deliveries to significantly above 90 percent, reduction in the ratio of net working capital to sales to less than 20 percent, and a 10 to 15 percent reduction in supply chain-related costs. As part of Operational Excellence, Clariant will use CSS to develop a “best in class” supply chain.
Commercial Excellence – focus on sales and marketing
The kick-off for Clariant Commercial Excellence took place in 2010. Implementation of the Clariant Commercial System (CCS) laid important foundations within the Group for optimizing sales and marketing processes. This will allow Clariant to offer its customers the best service and the most attractive price-performance ratio in the future. In this context, Clariant launched initial basic modules in the Business Units focusing on improving margins and operational efficiency, among other aims. In 2011 the CCS team concentrated primarily on the area of transactional pricing. By 2013 the focus will switch to customer and sales management, and value-oriented pricing and sales volume. These efforts will be closely networked with the other Clariant Excellence pillars – for example, through intensified innovation management via Innovation Excellence. The three modules will place Clariant in a position to structure an integrated price adjustment process, improve the sales team’s effectiveness and focus more strongly on customer needs.
Innovation Excellence – focus on growth through innovations
A further strategic focus for 2011 was Innovation Excellence, with the objective of establishing Clariant as a global innovation leader in the area of specialty chemicals in the coming years. The focus is on developing new products and services, finding and establishing new applications for existing products. Clariant will concentrate its research and development activities on future global megatrends such as environmental protection, raw material and energy efficiency or alternative energies as well as food availability. Sustainability is an important part of Group strategy, with the focus on technologies for instance for the development of products based on renewable raw materials. At the same time, Clariant will work intensively on resource-conserving processes.
Innovation Excellence, which was officially launched in July 2011, will be introduced in a multi-stage process:
Definition of an innovation strategy: the entire organization will be informed as to the strategic goals and the core areas that will be emphasized.
Establishment of innovation processes: with a focus on process management and guaranteeing efficient development of advancements that fit the innovation strategy.
Creation of an innovation culture: raising awareness among all employees about the need to look beyond the current product portfolio and to focus on continuous development of sales potential through development and promotion of new product ideas and technologies.
Training of relevant staff: systematic training and empowering of employees to recognize the needs of rapidly changing market environments, and to implement the necessary processes of improvement through innovation.
The implementation process across all Business Units is slated to begin in 2012. Once the four stages have been successfully implemented, Clariant will be able to advance the process of profitable growth by 1 – 2 percentage points per year – solely through Innovation Excellence. Clariant has also introduced the new “idea to market” concept throughout the Group; it is designed to discover, develop, implement, and commercialize innovation ideas within the shortest possible time frame.
In organizational terms, the realignment of R&D and the innovation chain in 2010 has already laid important foundations for leveraging considerable additional synergy potential while also increasing efficiency. Further information on this topic can also be found in the separate section of this Annual Report entitled “Innovation and Research & Development.”
People Excellence – focus on continuing development of all employees
The introduction of People Excellence will increasingly become the new focus of Clariant Excellence after 2011. A basic requirement for making Clariant a global leader in specialty chemicals is to be able to rely on a well trained and motivated team of employees. Clariant is therefore building on a strong organization that is oriented to the core elements of strategy, structures and processes, as well as values and conduct. The company dedicated itself to the first two elements primarily in 2009 and 2010. One of the first implementation steps of People Excellence was to define new corporate values consisting of six basic principles:
- Drive for Excellence
- Disciplined Performance Management
- Deliver to Promise
- Courageous and decisive leadership
- Lived appreciation
- Corporate Responsibility
Sustainable value creation within the entire Clariant Group is not possible unless these values are implemented in everyday operations.
Everyone must uphold corporate values
The corporate values have been supported in all Business Units of the Clariant Group since mid-2011 through regional workshops and executive training programs. The background and consequences for daily operations and the specific distinguishing characteristics of certain regions and activities are integrated into the process and developed further. A People Performance Cycle will be introduced in 2012. It will consist of systematic performance and talent management and application of a 360 degree feedback process leading to qualification and permanent development monitoring of all regional and local managers. The pilot phase for the new Local Leadership Training program was launched in October in Frankfurt; between November and the end of 2012, it will be expanded to cover the entire Group.
Summary and Outlook
The results of Clariant Excellence after three years are as follows:
- We have succeeded in improving Clariant’s performance sustainably; this is reflected in the improvements already achieved, which represent financial benefits of more than CHF 160 million.
- Clariant has created a solid platform for additional significant improvements by implementing a large number of projects and launching further initiatives.
- Clariant has redefined its corporate philosophy and reestablished employee focus on sustainable value creation.
- By doing so, Clariant has changed the way and culture of working in the Group.
All Business Units and Services are wholeheartedly committed to establish and expand the four pillars of Clariant Excellence and LeanSigma in their local and regional organizations. Based on the processes already launched and the upcoming initiatives, Clariant firmly believes that it can achieve additional sustainable improvements totaling more than CHF 60 million per year. This number is backed up by the following targets: productivity in the Clariant Group as well as the operationg margin relative to EBIT will be increased significantly through the disciplined implementation of Clariant Production System as well as through the Clariant Commercial System. In addition, net working capital, service quality and supply chain costs will be significantly improved by implementing and applying the Clariant Supply Chain System.