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Supply Chain Management for Chemicals in 2019

18.01.2019

PINPOOLS seeks continuously the current and interesting topics in the chemical industry from reliable sources. We see this as an important role to educate and share fresh ideas to our customers and readers, please take a look at the newest blog about the chemical supply chain.

 

As the digitalization takes over the whole world, it affects the different parts of the business. One of them being supply chain management (SCM). According to Deloitte (2018), nowadays more than 2/3 of customers are reaching out to the suppliers. The old model, the companies having the major responsibility of reaching out to the customers, is gone. Today’s customers know what, when, and how they want to satisfy their need. As customer demand is going higher with the developing competition, suppliers need to find a way how to have a good level of SCM and keep the customers satisfied. Customer to business, C2B, is starting to play a more integral role as the customers have more decision power over the companies. The graphic down below by Deloitte indicates the percentages of which amount of contacting is done by suppliers and which by customers. As it can be seen, digitalization definitely makes it easy for customers to reach out to their favorite companies, since more than 70% of the contracts were done by customers using digital channels such as websites, social networks, search engines, e-mails and industry platforms like PINPOOLS.

Deloitte (2018)

 

This shift has created challenges to both parts, the chemical market, and supply chain. The people working closely in the industry need to be up-to-date in order to recognize these challenges and react before it is too late. The industry is also highly regulated, to ensure the safety of chemical production and transportation, which adds the need to paying attention to the current topics and changes going on in the industry. According to LogiChem, the market in Europe is the strictest with regulations in the whole world and the amount has increased by 60% from 2008. Globalization has created new opportunities with transporting chemicals across continents, but it brings up challenges as well. The supply chain is more and more dependent on current topics and regulations going on in the chemical industry, which company’s supply chain managers should not take for granted.

 

It does not only help to realize the existence of the current topics; the action is often needed as well. The importance of planning and having strategic solutions plays an integral role in each company’s way to success. Before a better process of planning can be implemented, challenges need to be recognized and though carefully throughout the whole company organization. As the partner of Deloitte Dr. Wolfgang Falter states

The dream combination for each company is to work efficiently with small costs, meanwhile managing a high level of customer satisfaction, right? That is a great goal to have, but it is often easier said than done. In Deloitte’s report Supply chain management in the chemicals industry (2018) the key aspects for the chemical market and supply chain are listed. Check out down below which stood out the most for PINPOOLS:

  • Customized customer profiles and products

Having a clear vision of what the customers are looking for and what is their demand, is going to improve the ability to set customized services for them. In order to implement successful supply chain management, the whole company organization has to create a clear vision of how and when to offer customers special customized services.

  • Transparency

Digitalization has created a higher need of transparency, being able to take a look at the available information. As Christian Williamson mentions “Companies today need transparency throughout the supply chain to understand costs, anticipate future costs and prices, and understand supply and demand issues.”

  • Differentiate other than price and listen to the customers

These are one of the key factors for any industry: the price plays an important role to stand out from the competitors, but it should not be the main tool used in the competition. Listening what the customers want from the supply chain, then implementing these wishes in a best-founded way, is going to improve the level of competitiveness.

 

In this text it is often mentioned about listening to customers’ wishes and demands in the industry, but what are those actually? LogiChem ranked top 4 functions for the customers as follows:

LogiChem (2019)

In the end, the differences are not that big. Speed of Delivery is less than 10% more important than transparency, which means all of these functions should be considered when planning and improving the supply chain. Price is an important factor, but as earlier mentioned, it should be the only competitive tactic. It plays a bigger role in B2C, but for B2B small differences in prices does not affect as much to the purchase decision. Even though transparency is ranked the lowest, PINPOOLS believes it is a valuable part of the chemical business. That is why it is one of the unique selling points of the platform with independency.

 

As a conclusion, it can be said that the company should focus on customers’ wishes and see which factors they respect the most. Analyzing and planning helps to put the time and money to the right parts of the business. The new process of customers approaching the companies changes how people get in touch because due to the digitalization and global business, there are new channels how to reach a company even though it might be across the world.