In one of his famous fables, Aesop once said, “In union there is strength.” That’s certainly true, but there’s also something to be said for allowing individuals to go their own way once in a while. This approach has proven to be one of the keys to success for Sensient Technologies, according to Chairman and CEO Kenneth Manning. The global provider of coloring and flavor solutions has grown significantly in the past decade by giving its individual locations around the world the opportunity to make their own decisions.
By organizing the company’s regional operations into profit centers, Sensient has the ability to serve specific regional markets directly. At the same time, these independent units can collaborate and share information, making each one stronger on its own.
Originally founded in 1882 as gin-maker Meadow Springs Distillery, the company benefited from a booming economy and built itself into a highly diversified company. After Manning became CEO in 1996, the company jettisoned most of its low-profit business units and concentrated on building its color and flavor units. Since 1997, the company has made more than 20 acquisitions to strengthen and solidify its position in these specialty chemical markets, which now also include fragrances. The company is now one of the world’s leading worldwide manufacturers of colors, flavors and fragrances for food, beverages and household and personal care products.
“I think the primary difference between Sensient and its competitors is the fact that most of our competitors are flavor and fragrance companies,” Manning says. “We have the ability to produce colors, so we can create a system that includes both color and flavor. We partner with our customers to offer a complete system in the form of customized beverage and food formulations.”
Sensient’s status as a leading global corporation comes from its many business units, which are located throughout the world. Manning says the profit center approach has maximized the advantages of its global presence. The system creates semi-autonomous business units that serve specific markets, rather than centralizing all operations in one location. For example, the main office for the company’s flavors and fragrances group is located in Indianapolis, but has profit centers in Germany, Italy, France, Spain, Canada, Mexico, Japan, Korea and China. Managers in those offices have almost total authority over operations in their specific regions.
“Because the company covers a lot of geography, we are highly decentralized,” Manning says. “We now operate from over 70 locations in more than 30 countries. When I became CEO, about 95 percent of our employees were U.S. citizens. Today, nearly two-thirds of our employees are nationals of other countries and about 60 percent of our revenue comes from non-U.S. business.”
The key advantage of the profit-center system is that it creates a streamlined organization in which each unit can operate independently while still being able to share information and processes with other profit centers. For example, Sensient manufactures the color and flavor for a major energy drink company. Components are manufactured in facilities in the U.K., St. Louis, Missouri, and elsewhere before being formulated at another profit center and shipped as a complete system. This means the company doesn’t have to duplicate equipment in each location.
The autonomy of each of Sensient’s profit centers also extends to the development of new products. Each group has the authority to develop specific technologies and products based on customer requests, with profit centers communicating and sharing their findings with one another.
Recently, Manning says, Sensient introduced new developments such as a natural color line based on shades trademarked as Fusion Precise Natural Colors. These are stable and consistent natural colors for a wide range of foods and beverages. “This is a unique product line,” he says. “We can match almost any color the customer would want.” The company also has made strides in developing emulsion-based products that Manning says are extremely versatile.
“We’re leaders in emulsion technology, which can be used to produce either flavors or colors,” Manning explains. “Our formulations offer superior performance and greater shelf life. This technology also can be used to produce natural colors.”
Sensient’s focus on its autonomous profit centers will continue to spur innovation at the company, Manning says. “The future is going to be very exciting. We will see a continuation of products that are focused on health consciousness,” he says, pointing to the current natural foods trend as an example.
“I think the natural trend is here to stay,” Manning says. “We see it as a huge opportunity, particularly in color.”
The company plans to continue the growth that has positioned it worldwide, Manning adds, noting that Sensient has programs in place to open profit centers in eastern Europe and to expand its sales force in Scandinavia and the Baltics. Manning says the next 10 years for Sensient look to be just as successful as the last 10. “Our growth prospects remain very strong and we’re going to continue to expand geographically,” Manning predicts.