EconomyFinancialBIC's strategy for not relying on back to school

BIC's strategy for not relying on back to school

Returning to school worries parents; but also manufacturers of school and office supplies. It is not for less; sales of pens, markers and other writing supplies, for example, have been affected by the cessation of activities in the classrooms.

Only the sale of pens had a drop of 8% from January to October 2021 – the latest data available by Inegi – compared to the same period of the previous year and 17%, over the period of 2019. This is a decrease of about 500 million pesos on prepandemic sales and about 212.5 million compared to 2020.

The preliminary balance for 2021, although negative, reflects an improvement that did not finish materializing and that brought challenges to production, inventory management and the supply chain, according to Mario Berra, Global Vice President of Manufacturing at BIC, manufacturer of articles school and office supplies whose back-to-school sales account for 40-50% of their stationery division revenue.

“The year (2021) has been higher, in volume, than we planned at the end of the previous year, which tells us that many markets are at levels close to 2019. This has created challenges with suppliers, with materials that we bring from different countries and some local raw materials ”, he mentions.

Since July 2020, Berra has led the production of stationery and razors, two of the three divisions of BIC. From January to September of last year, both businesses generated 835.6 million euros (mde), 60% of the income obtained by the French company. In 2020, the sales of both segments totaled 758.7 million, according to data from its latest quarterly report.

Under his command are 18 of the 23 plants that the company has globally, which is equivalent to directly or indirectly supervising the work of 8,000 of the 9,000 employees in BIC production facilities. It does so from Cuautitlán, in Mexico, where the company’s largest stationery plant is located; but he frequently visits the other factories, whenever restrictions on travelers allow it.

These are four plants for the production of rakes that are in Brazil, France, Greece and in Ramos Arizpe, in Coahuila, with an annual production of 2,300 million units; and of 14 stationery manufacturing sites: four are in France, four in the Africa cluster (Kenya, Nigeria, Tunisia and South Africa), three in India and two in Brazil, in addition to the plant in the State of Mexico. They produce 4.5 billion units annually, mainly pens.

Unexpected demand

For all of 2021, the company’s forecast, according to Berra, was 4.180 million units; but by the end of the year it was already around 4,500 million, an increase of 10% globally. “If we see only Mexico, it is 19% and it is accentuated here because the Cuautitlán plant exports to 47 markets and particularly to the United States,” he says.

To cover an unexpected demand, the firm negotiated with suppliers and made extraordinary contracts. In Mexico, the highest demand occurs in the first half of the year and declines in the second semester, which is why between November and December of the previous year, the firm hires people who work from January to July; But in 2021 it had to add more staff in order to recover the inventory level that, in some products, went lower than expected as “strategic inventory”.

“We had to prepare an additional number of people compared to the initial plan and we also moved raw materials to be able to produce,” says Mario Berra. He adds that part of what was experienced the previous year is due to the cost-benefit ratio offered by the brand.

And it is that the cost is an attribute that determines the purchase choice. “When it comes to choosing a pen, consumers consider price as the second most important factor, the first being the tone of the ink,” according to a report by Persistence Market Research, which highlights visibility and availability as a key factor of the product.

Selective consumption

Berra admits that having schools closed certainly affects BIC’s operation, but the fact that consumers are more selective plays in favor of the company and its innovation strategy. “The consumer today is looking for a stronger value-cost relationship. The price is no longer everything, it is not just that it comes out cheap … The issue of purpose, of sustainability, is very important, “he says.

Another report by Persistence Market Research that puts the market value of writing instruments at $ 21.6 billion, agrees. The analysis establishes that there is a trend among manufacturers to create pens made with recycled PET and biodegradable materials as part of a strategy that helps them “gain a competitive advantage in the market and meet consumer demand for sustainable and sustainable products. biodegradable ”.

In 2018, BIC reconfigured its sustainability agenda that establishes, among other things, the development of a sustainable supply chain, products and packaging. Hence, the company works to eliminate PVC and PET from recycled cardboard materials, something that is already on the way for the packaging of the crystal ballpoint pen, a traditional product of the brand that in 2021 turned 70 years old. For this reason, the firm designed a metal version that is rechargeable and has a lid made of 96% recycled plastic.

Additionally, the firm also changed complete families of razors that were made with polyethylene blister, to a recyclable cardboard box, and since May of last year presented a rake with a handle made of bamboo, a product until now available on the Swedish market.

“Future markets will be increasingly selective towards companies that focus on delivering value to society and not just wanting to sell their products,” concludes BIC’s Global Vice President of Manufacturing.

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