Finding the Path to Operational Excellence at ZENI 1
Finding the Path to Operational Excellence at ZENI
Julio Sánchez Loppacher, IAE Business School María Barale, IAE Business School Marcelo Pancotto, IAE Business School
In early January 2012, Patricio Zeni, the General Manager of UFI (Forestry Industry Unit), a division of ZENI, was wrapping up at his office after a sweltering day at the company’s plant in Esquina, a town in Corrientes, a province in the northeast of Argentina. Among other things, he had met for nearly three hours with Pablo Costa, the Plant Manager.
The UFI’s margins were not as good as they used to be. Argentina’s economy, with an average annual inflation between 15% and 20% and a lagging exchange rate (Exhibit 1) had raised costs, and product prices were set in foreign markets which did not offset the effects of the country’s monetary policy. With all of this in mind, Patricio was very worried because another year with negative results would leave the company almost out of a business that had been historically profitable.
After reviewing a report on ZENI’s service quality level (Exhibit 2), Patricio found a new source for concern: product delivery was not as timely as it should have been. But none of this could be addressed without taking into account increasing profitability. Patricio pondered
Though I think we are doing what we have to do, we should be getting more profits out of this business. Can we find opportunities to enhance our production practices? Will we be able to introduce some changes to improve our competitiveness?
Founded by Enrique R. Zeni, ZENI started operating in 1940 as a small grain trading company.1 It grew steadily over the years, turning into one of Argentina’s largest grain and oil seed brokers with increasing professionalism to provide value-added services.
—————————– Copyright © 2017 by the Case Research Journal and by Julio Sanchez Loppacher, Marcelo Pancotto, and Maria Barale. This case study was prepared as the basis for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The authors wish to thank Maximiliano Fernandez Vera, for his cooperation in preparing this case. The authors also wish to thank the anonymous reviewers who provided very useful comments and suggestions and John Lawrence for his insightful comments and recommendations that strengthened the case. Finally the authors wish to express their gratitude to IAE Business School for supporting the publishing of the case with financial means. An earlier version of the case was presented at the 2014 Annual Meeting of the North American Case Research Association in Austin, Texas.
For the exclusive use of R. Nigaglioni, 2017.
This document is authorized for use only by Rolando Nigaglioni in 2017.
2 Case Research Journal Volume 37 Issue 1 Winter 2017
To drive the company’s growth, Carlos Zeni, the founder’s son, joined its management team, and, years later, his three children –Patricio, Marina and Ignacio– also started working there. Ignacio managed ZENI’s brokerage business, while Marina was in charge of the citrus and cattle production business, and Patricio headed ZENI’s UFI. Carlos participated in these units’ management decisions, especially in cattle farming and UFI. In fact, he often travelled to Corrientes, as he put it, “to stay abreast of what is going on in our business…” Also, Patricio made frequent trips to ZENI’s headquarters in Buenos Aires to manage the company with his father and siblings.
In 2012, ZENI employed more than 700 people and the attrition rate was very low, which made ZENI proud of its culture and its contribution to the development of the community where it operated. Grain brokerage was one of ZENI’s largest businesses, and the firm operated extensively in all of Argentina’s farming areas, with offices across the country and an active involvement in the Chicago and Kansas City markets. Ignacio recognized that one of its key assets lay in its long-term customer relationships, based on the company’s solvency, reliability, swift service and, primarily, trustworthiness. ZENI offered a comprehensive service that included expert advice, such as when to buy an option or when to sell or buy grain, and updated information on market quotations and terms. Its overriding goal was to add value to its business chain in an honest and responsible fashion.