SUPPLY CHAIN MANAGEMENT
Steven Holland spent nine years with Brenntag as it grew all over the world
‣ be ready for that future . Making your way through day-to-day and serving customers as best you can is clearly important but it ’ s equally important to have a view of what ’ s going on over the horizon . There is a danger that in the nottoo-distant future , we will see a change in the dynamics of the market . Volumes will increase with customers , margins will be lower , the supply chain will ease . The more normalised and competitive position will return and you will see a change in the dynamics between large and small distributors . So we need to ask ‘ What happens next ?’
Every business is unique , of course , so presumably each one will have to deal with the tumultuous market and its changing dynamic in its own way , so it is difficult to have a ‘ one size fits all ’ strategy … It is , and what I would say to everyone is to re-examine those cherished assumptions about your business . When we look at our performance , we tend to pick a data point in the past and make comparisons with today . These data points can be quite misleading . Quite often I have seen markets be underdeveloped or missed completely because of a misunderstanding of what market a company can address . I used to refer to a ‘ Bermuda Triangle effect ’, where companies have no sales – or never had any – in a certain large area , leading them to assume that the business was not there to be had , which was untrue . It is all too easy for assumptions like this to become ingrained in a business and , as a result , for an opportunity to be missed .
How do companies get away from ‘ cherished assumptions ’? It can be hard because you need to look in the mirror and have a reality check , asking ‘ Do we really understand the market ?’, ‘ Do we really understand what services we provide our customers ?’ or what the competitive profile is in that market . I have often been at meetings where it has emerged that many people have no idea who their competitors in a specific market are , or what they offer . That ’ s a pretty strong indicator that you need to understand your market better than you do – and this happens with companies of all sizes . As CEO of Brenntag , I was often asking the seemingly stupid questions in order to get the obvious answers – which sometimes weren ’ t there . In the current situation , we are looking at a substantial volume drop in certain markets due to supply chain difficulties or a simple fall in demand . The big danger here is that it easy to explain a volume drop in these terms – but is it true ? Is the situation the real reason the company is not selling much of a certain product in a certain market ? It may not be . You need to examine the real reasons to be sure you aren ’ t simply missing a substantial deviation in your business performance and attributing it to something that is easily explained . There are probably quite a few customers out there who have reformulated in order to ensure that they are not short of a certain product that is unobtainable in the supply chain . Companies should be alive to that situation , because if they are not , they will not find out until the orders are no longer coming in
To sum up , what are the top takeaways from you ? First , we are in an unusual situation right now but all that will change . Prices will come down , supply chains will free up , margins will probably weaken somewhat , cash will reverse and there will be a reinvestment in stock . You need to be ready for that . When any company is looking at its strategy going forward , they need to keep checking and rechecking their assumptions , particularly when it comes to planning the future based on data from the past that may well have been wrong . That applies to companies of all sizes . Also , small and medium-sized companies should not underestimate the fact that innovation , agility and service really trumps price . If you are able to create a business model that delivers those things , you are positioned for success , even against the largest competitors . •
Matt Dixon
MANAGING PARTNER
CCD PARTNERS k + 44 203 287 2472 J contact @ ccdpartners . com j www . ccdpartner . com
44 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981