You live in a world where 40 percent of your sales are in product not yet five years old. Margins are tight due to recessionary pressure. Shipping and packaging costs are high because the products you manufacturer are delicate. Energy, efficiency and e-business are the three important mantras.
Welcome to the lighting market. Henny Peters, executive vice present and general manager, General Lighting division, Osram Sylvania, Danvers, Mass., has lived lighting for 22 years. Now in his seventh year in his current position, the Netherlands native was president of Osram's Dutch subsidiary before becoming president of the company's North American division in 1986.
In 1993, Osram purchased Sylvania Lighting. Today, Osram Sylvania is the second largest of the “Big Three” lamp manufacturers. Its sales are smaller compared to GE Lighting, Cleveland, Ohio, but ahead of Philips Lighting Co., Somerset, N.J.
Among the Big Three, Peters has the longest tenure at a senior management post. He has seen many changes in the North American lamp market. Early in his tenure at Osram Sylvania, he helped blend the strengths of Osram's ballast business and several lamp markets with Sylvania's strengths in key industrial/commercial and consumer lighting markets. This combination evolved into a “systems sell” approach, where Osram/Sylvania's lamps and ballasts are sold as a package.
Throughout the tumultuous 1990s he and former CEO Dean Langford, who retired two years ago, guided Osram Sylvania through the challenging waters of utility rebates, ballast shortages, federal legislation and changes on the competitive front, where the company's largest competitor, GE Lighting, is now for sale.
Despite all these changes, many of the challenges remain the same. “It's innovation, innovation and innovation,” says Peters. “We must move away from commodities toward products that set us apart.”
A current key initiative is the construction of a network of new distribution centers. Osram Sylvania announced plans in October 2002 to build a 454,000-square-foot distribution center in Versailles, Ky., that will serve the central United States. Osram Sylvania hopes the new distribution center will be fully operational in late-2004. The new center will join existing facilities in Bethlehem, Pa., and Ontario, Calif. Over the next two years, five distribution centers are planned to close and will be consolidated into the new Midwest distribution center.
On the e-business front, Peters is a big supporter of the company's efforts to harness the potential of e-business. Osram Sylvania was also one of the earliest supporters of the electrical business' Industry Data Warehouse (IDW). In the company's industrial/commercial market channel, Peters says the company conducts 55 percent of its business electronically.
At the foundation of these efforts was the installation of an SAP computer system that's now woven into the very fabric of the company and helps executives manage manufacturing, sales, accounting, logistics and a host of other applications.
But for all that Osram Sylvania has done in e-business in recent years, differentiating itself in the marketplace with its products offering is still its key differentiator. Part of the challenge is developing the new products that account for so much of annual revenues while still servicing customer demand for evergreen products such as basic incandescent and energy-efficient fluorescent lamps.
To help meet the challenge, Osram Sylvania has invested in a major R&D initiative to develop next-generation light sources such as sulfur lamps and LED lighting. While the lighting market is buzzing about LED lamps, according to the 2002 Osram Sylvania annual report, LED lighting will not be available for general application lighting for 10 years.
“No matter how varied the lamp market may be, no technology will ever die out completely,” said Peters in the company's 2002 annual report. “People love the incandescent lamp. Its light conveys a cozy feeling and its low price is unrivaled. In terms of the number of units sold, it's still the most widely used light source.”