Centralizing market intelligence at BASF

Interviewed for this case was Xu from BASF, based in Hong Kong.

Background on BASF

Headquartered in Ludwigshafen, Germany, BASF is the largest diversified chemical company in the world. It is listed on the Frankfurt Stock Exchange, London Stock Exchange, and Zurich Stock Exchange. With about 111,000 employees, six Verbund sites and close to 370 production sites worldwide, BASF serves customers and partners in almost all countries of the world.

The BASF Group comprises subsidiaries and joint ventures in more than 80 countries and operates six integrated production sites and 390 other production sites in Europe, Asia, Australia, Americas and Africa. In 2011, BASF posted sales of €73.5 billion and income before special items of approximately €8.4 billion.

The role of market intelligence at BASF is to support strategy realization, whether this support is for investment projects, mergers and acquisitions, economic and competitor intelligence or just day-to-day research.

Globally, the market intelligence function at the BASF headquarters in Germany comprises over 100 people, with much smaller units sitting in different regions. In the Asia Pacific, the market intelligence team comprises just two people. With such a headcount, it is imperative to leverage efficiencies in the management of resources, budgets and local knowledge for more efficient market intelligence within the region.

A survey of various regional business units in Asia showed that business managers felt that they often wasted time on looking for information on their own, which would have been better used on other tasks. The related costs were not just management time but also higher costs when negotiations were conducted on a local level.

“By centralizing the resources on an Asia Pacific level, we are in a much stronger position when it comes to negotiating with vendors on reports that the various countries use. The cost savings can range anywhere from 15 percent to 30 percent. In fact, some of our reports are generated on a global level, which we find is even more cost effective and ensures consistent quality standards across our organization. This makes comparisons across countries and regions a lot easier,” said Xu.

Approach

“Because we offer many product lines, there is some level of complexity in our organization and business. We used to have separate databases of external consultants, information portals, databases and researchers just for the Asia Pacific region alone. As a result, the internal co-ordination and exchange of insights was difficult to achieve, as there was no transparency in the information we had as a group. So it was clear to us that our immediate goal was to streamline the work and remove duplications. To ensure the buy-in from our colleagues as early as possible, we made it a point to provide a system that is easy to access and is as simple as possible. This would address the internal frustration over time wasting.”

The situation that the Asia Pacific team at BASF faced is not an uncommon one and is hence an interesting case study on how to introduce a new market intelligence system and turn initial skeptics into advocates and participants.

We asked Hong Hong Xu to share her views to a few questions.

What are the challenges of moving from a decentralized to a centralized structure?

“In a decentralized system, you will typically encounter complex internal structures and a wide range of processes at different units. Each business unit and country will also have its own cultural differences and may resist a uniformed approach if you don’t take the time to listen and examine how best to meet local needs.

We noticed that even though the local units spent resources and time on sourcing for information, they were concerned that the data they got was not reliable and at other times, there was simply an information overload. Everyone recognized that resources could be used more efficiently.

From a regional standpoint, the question for us was how could we improve things as a partner to the local business units and not add an additional layer in an already complex organization.”

How did you go about planning the new centralized system?

“First, we kicked off with an internal survey asking just three questions; what are your typical sources of information, what difficulties have you encountered when looking for information, and what kinds of information would be most relevant to your work.

We found the sources ranged from newspapers, magazines, market reports, online search engines and professional search systems, to government statistics departments, reference books and journals, and competitor websites. Wikipedia was a common reference source, as were BASF colleagues and customers. At times, external consultants would be commissioned for customized research.

The main challenges were information overload and difficulty in filtering down to the correct and specific type of information needed. Most information would be outdated. Competitive intelligence would be challenging to attain. Overall, there wasn’t a consistent, reliable source of market intelligence.

Most business units needed macro- and economic data by country, region or industry, customer or competitor intelligence and import-export statistics. They were also interested in up-to-date market or Industry trends, supply-demand statistics, financial and broker reports, and information on government regulations. Other requests included the prices of raw materials, specific product market price indices and value chain information. Here, we found that there was quite a lot of duplication of work.

So one priority for us was to create a simplified and centralized structure to cover the most important and common market intelligence needs, and to improve the reliability of the data and sources. With this, we would have greater intercultural and inter-organizational information transparency and efficiencies.

We shared these results with the business units and showed that by improving coordination and knowledge sharing with a centralized department to cover various market intelligence needs across the organization, we would help them save time and money.”

Please describe the new centralized system.

“Our first step was to summarize all internal and external available data sources which were proved as reliable. Then, we also centralized all the internal available market reports and studies to one place. After this, we established internal service workflow to support our business units when they needed to conduct tailor-made market studies with external consulting companies.

We developed our own Asia Pacific market intelligence portal which is located on the first page of our intranet, and which has a structure that is simple and easy to use. It takes just one click to find all the available specific reports and studies.”

How long did this take you and would you say you have completely achieved your goals?

“This took about 12 to 14 months to set up the market intelligence platform. As this is continuing process, we will review our benchmarks and adjust them to be in line with the needs of our business units from time to time.

How did you win advocates for the new centralized system?

“There were three strategies that we used to win advocates for the system. The first was comprehensive face-to-face training. Secondly, we make it a point to respond to requests in a timely manner. Finally, we conducted a regular satisfaction survey. All of the above helped us to win recognition and acceptance from our peers.”

What are some of your next steps?

“We plan to increase the amount of users and also to keep them updated at all times. Also, we want to upgrade our system in terms of user satisfaction. We also intend to enhance synergies between regional and global market intelligence teams with the purpose of creating a best practice model.”

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