Speciality Chemicals Magazine NOV / DEC 2022 | Page 50

better , prevent churn proactively and helps in cross-selling , while achieving a 5-15 % reduction in inventory . This does not include the benefits of using digital platforms . “ These four trends will all significant impact industry and the value chain going forward ,” he concluded . “ Each of these could be a major threat or an opportunity . I believe that the distributors are at the centre of this and can create solutions that add value for everyone , but you need to ‘ play offense ’ to win .”
Five key observations
The Boston Consulting Group ( BCG ) carries out regular surveys relevant to the industry in partnership with FECC , noted Yehia Amar , a project leader there . On the basis of the most recent , in May 2022 , he made five key observations .
Amar - Sustainability and China the disruptive factors
Firstly , past growth drivers are continuing . Chemical distribution , he agreed with Winkler , has been growing faster than chemical manufacturing in recent years because outsourcing has been going up . However , the drivers are different : for commodities it is manufacturers ’ desire to reduce their complexity , whereas on the speciality side it is market players ’ need for segment-specific know-how Secondly , chemical distributors are resilient even in turbulent times . The hit they took from COVID was far less than had been projected and there were many positive factors in chemical distributors that made them so resilient :
• Their ability to store excess output is particularly important at times of crisis and volatile demand
• Expertise has become one their key selling points , especially the kind suppliers lack and at times of greater complexity and competition
• Their supplier networks enable them to provide reliable sources of supply gives customers confidence when other sources fail Like others , BCG has noted that this varies between segments . During the pandemic , some like chemicals for the automotive industry suffered quite badly , whereas others , like food , nutrition and pharmaceuticals whose products are used daily , were particularly resilient . Thirdly , also echoing others , BCG has seen that value-driving digital use cases are well known by now . “ The kind of use cases we see are creating transparency for suppliers ,” said Amar . “ In fact , some companies now pay a subscription fee to have access to the data of their partners , regardless of products .” Digitalisation has been widely used in logistics to optimise transportation , sites and networks , as well as processes and data . On the customer-facing side , there are multiple well-established marketplaces , platforms and selfservice portals . “ This is nothing new but what is interesting and quite surprising , even frustrating , is that nothing has really taken off in our industry in a big way ,” said Amar . “ One of the reasons for that is that many distributors have followed a very focused approach to digitalisation .” This may be back-end focused , like data cleansing or investing in harmonised IT platforms , or frontend focused by creating a portal for customers . This has led to a sort of schism in the industry because it is very difficult to do both properly . “ In my view , the biggest digitalisation challenge in a chemical distribution company is finding the holistic view and trying to marry those two approaches ,” said Amar . “ I think we are starting to see some of the fruits of these investments made in this market , especially in the back end .”
50 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981