September/October 2017
B ULK D ISTRIBUTOR
Chemical Industry
3
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P
rotectionism and geopolitical crises will be the main issues
influencing German chemical companies’ supply chains
over the next two years.
A Chemonitor trend survey by Camelot Management Consultants
and the specialist newspaper CHEManager found that supply chain
sustainability, digitalisation and the price of oil come somewhat
further down the list of key short term challenges. Although,
sustainability criteria in the supply chain will become an important
competitive factor, it discovered.
The significance of China as a trading partner will gain in
importance, while Donald Trump’s protectionist policies weakens the
attractiveness of the USA as a partner for Germany’s chemical
industry, says Camelot.
“Germany and Western Europe are becoming increasingly
attractive as key markets for the German chemical industry,” said Dr
Josef Packowski, managing partner at Camelot, summarising the
results. “Outside of Europe, strongly influenced by protectionism
and geopolitical crises, global supply chains will increasingly focus on
China and Asia over the next few years. North America is dominated
by uncertainty,” he added.
In the survey, the German chemical company managers cited
protectionism (51 percent) and geopolitical crises (45 percent) as the
two developments with the greatest impact on their company’s own
Specialising in inorganic materials that have few domestic sources
of supply, Aakash has established a network of vendors – most
based in developing economies – which excel in sourcing and
refining materials, but lack application and end market expertise
and a proper sales network that can get their products to the big
markets in North America and Europe.
The company has its own R&D department that works with
vendors to develop innovative colour solutions that meet the needs
of its end market customers. Deep technical knowledge and
application expertise is put to work for its customers which have
come to depend on Aakash to deliver customised solutions.
All materials and products from vendors are imported into Aakash’s
facilities, where they undergo quality control testing and, if
necessary, additional light reprocessing. Aakash tests combinations
of resin systems, additives and pigments in order to deliver a product
the customer knows will work as intended, every time.
Customer accounts are handled by very experienced, senior
people in the organisation which are skilled in offering a complete
menu of value-added services, including import logistics, regulatory
compliance across multiple legal systems, quality control, R&D
support, specialised blending, as well as the traditional distribution
services such as repackaging, bundling, and warehousing. In
essence, the Aakash business model is to function as a multi-
national intermediary, providing a global market for vendors and
custom blends of products and services for customers.
Major, minor
The value-added model of distribution, which has mostly been
pioneered by small and medium-sized players is not surprisingly
attracting the interest of not just the sector’s big firms but private
equity too.
The challenge for these large distributors is to maintain the ‘high
touch’ strategy of value-added distribution while continuing to
scale up globally. Their solution is to establish industry-specific
verticals within the organisation, enabling them to provide
localised expertise to their customer base while retaining the
economies of scale and geographic reach of a global organisation.
Private equity investors have also shown increasing interest in
value-added distribution companies, and are executing ‘roll-up’
strategies to build global distribution networks that rival the
publicly-traded firms. Azelis, one of the few remaining major
independents, was acquired by Apax Partners in March 2015. Apax
has supported Azelis’s continued growth through acquisitions,
which include Koda Distribution (2015) and the Italian distributor
Ametech (2016).
Another example of a roll-up strategy is Maroon Group, a
specialty distributor of additives, pigments and resins acquired by
CI Capital Partners in 2014. In less than two years, Maroon Group
has built a strong portfolio of national distributors for the CASE
markets (coatings, adhesives, sealants and elastomers) with the
acquisition of Addipel (2014), CNX Distribution (2016), US
Chemical (2016), and most recently, Lincoln Fine Ingredients
(2017).
supply chain over the co ming two years. Only one in five chemical
industry managers think that free trade agreements could
significantly influence their own supply chain.
Around a third of those questioned expect better export and
import conditions in their trade dealings with China over the next
two years, but there was a clear trend to the contrary with regard to
the USA. Since Donald Trump was elected president, his protectionist
policies have lessened the attractiveness of the USA as a partner. In
March this year, more than three quarters of chemical industry
managers surveyed anticipated poorer conditions for overseas
exports in the short term. Half of them also expected chemical
imports from the USA to Germany to be hindered.
Against the background of the G20 process and the sustainability
targets of the United Nations, chemical industry managers were also
questioned on the subject of sustainability in the supply chain. Dr
Sven Mandewirth, partner and chemical expert at Camelot,
summarised the results, saying: “In the long term, sustainability will
be an important competitive factor in the global supply chain. This is
still the belief of fewer than 50 percent of German chemical industry
managers. The potential is therefore great”.
There were significant differences between large and medium-
sized chemical companies when it comes to taking sustainability
criteria in the supply chain into account. While 79 percent of
managers from larger chemical companies responded by saying that
their suppliers are evaluated based on sustainability criteria, for
medium-sized companies, the figure was only 35 percent.
A very large proportion take criteria such as human rights (83
percent), working conditions (79 percent), corruption assessment (71
percent) and environmental and climate protection (67 percent) into
account, in addition to the classic criteria of quality and price. In
medium-sized companies, these issues only play a role in supplier
evaluation in 35–45 percent of companies.
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In the long term, sustainability will be an important competitive factor in supply chains
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