Buckman Laboratories

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9-800-160
REV: JANUARY 22, 2003

WILLIAM E. FULMER

Buckman Laboratories (A)
If you can’t maximize the power of the individual, you haven’t done anything. If you expand the ability of individual members of the organization, you expand the ability of the organization. — Bob Buckman, CEO and Chairman of Buckman Laboratories

A major Buckman customer in Australia announced plans to commission a new alkaline fine paper machine in 1998. Not only was it always attractive to get “start-up” business but this particular machine tended to use more chemicals than most paper machines. The customer’s tender was broken into two areas--machine hygiene and retention—with annual revenues estimated to be $600,000 and $700,000, respectively. Although Buckman was a world leader in the area of machine hygiene, it had no experience with alkaline fine paper, and the on-site person in Australia was young and only had a few years of general experience. Also, Buckman was not a dominant player anywhere in the world in retention, especially for alkaline fine paper machines. Unfortunately the customer wanted to choose one supplier for both areas. Peter Lennon, national sales manager for Australia, and Maria Conte, area sales manager, knew that unlike all of their competitors they could not put together a physical team to work on the proposal so they decided to try a “virtual” global team. Maria sent out a call via K’Netix the Buckman Knowledge Network for help answering very specific questions. She received responses from more than 30 associates worldwide. From that group a team of 10 people from Asia, Africa, and North America (United States and Canada) agreed to commit to the project on a continuous basis. Not only did Buckman win the contract but they also were asked to try their program on another fine paper machine operated in Australia by the customer. *****

Bob Buckman considered K’Netix to be “the greatest revolution in the way of doing business we have seen in our lifetime.” He attributed much of the company’s 250% sales growth in the past decade and the fact that 34+% of sales were coming from products less than five years old to knowledge sharing. For a company the size of Buckman Laboratories, $7,500 per person per year to implement K’Netix was a significant investment. Yet, over the past five years the company had kept net income in the 3% to 6% range, operating income from 7% to 10.5%, and gross profits from 52% to 55%, in spite of worldwide currency fluctuations. By early 1999, however, there were growing financial concerns. Price pressures in all market segments were causing some executives to question whether the value Buckman Laboratories added with K’Netix made sense. According to one, “Is it ill timed?”

________________________________________________________________________________________________________________ Senior Fellow William E. Fulmer and prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 1999 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

800-160

Buckman Laboratories (A)

Company Background
Buckman Laboratories had been a leading manufacturer of specialty chemicals for aqueous industrial systems for over 50 years. It coordinated the activities of 20 associate Buckman companies worldwide; 19 had offices in more than 80 countries, marketing and selling more than 1,000 specialty th

chemicals manufactured...
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