Differences in the chemical supply chain

Strong industry trends—including increasing international competition, industry consolidation, and increased customer expectations—continue to put pressure on chemical manufacturers to improve their efficiency and effectiveness, especially in the end-to-end supply chain. As these trends put pressure on industry revenue and profitability, an excellent supply chain may have a huge impact on the performance of chemical companies.


Chemical companies have invested a lot of resources to improve the supply chain, but many chemical companies still need to make further efforts to establish a good end-to-end process, including the best customer service.


Using our extensive cooperation with leading chemical companies, we have developed a concise framework to help other companies move forward. The framework consists of 20 elements in five categories: strategy, network, organization, process and digital realization. Focusing on any single element cannot create excellence. Instead, companies must conduct a comprehensive assessment of the supply chain, determine which elements best suit their needs, and work within these elements to achieve performance and customer service goals.


Strong trends put pressure on the supply chain

With the globalization of the chemical industry, competition—especially from Asia and the Middle East—is intensifying, and raw material costs have become more volatile, which has increased pricing pressure. At the same time, customers demand better services from their chemical suppliers. This trend is undoubtedly encouraged by the improved service they experience when dealing with other industries. In addition, the industry is rapidly consolidating, with industry giants Bayer and Monsanto, Dow and DuPont, and (most recently) Clariant and Huntsman coming soon. The merger is proof. Chemical companies are moving in a more subdivided way in the way they manage their products, whether these products are daily necessities or innovative special products.


These industry changes have put increasing pressure on chemical manufacturers, especially their supply chains. For example, when companies face greater pressure to cut prices, they must find new ways to make the supply chain more cost-effective. As new competition and unsatisfactory customers affect sales, chemical manufacturers must improve their customer service performance to differentiate themselves from their peers, especially low-cost companies. With the merger of major companies, other companies must respond to the greater market influence of the merged company by differentiating service performance, reducing working capital, and improving asset productivity.

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