CASE STUDY

A Specialty Chemical Manufacturer Gained $ 15 Million by Implementing a Procurement Delivery Model

Aug 12, 2019

Specialty Chemicals Industry Overview

Shortening value chains in Europe is compelling companies in the specialty chemical industry to develop new products and extend their reach to new markets. However, ongoing high-cost pressure and complex supplier portfolios require companies to become centrally managed. Organizations need initiatives for cost reduction combined with procurement functions to standardize their operations.

Business Challenges Faced

A well-known manufacturer in the UK specialty chemicals industry was facing predicaments due to decentralized sourcing and procurement functions. With operations spread across 20 countries, the client wanted to develop a robust procurement delivery model that could integrate end-to-end source-to-Pay (S2P) operations. While cost savings was one of the business levers, the client wanted to develop, document and maintain procurement strategies and project portfolios. The client, therefore, leveraged SpendEdge’s expertise to analyze advanced indirect and direct sourcing processes in the specialty chemicals industry.

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Our Research Approach

With the aid of SpendEdge, the client conducted a strategic assessment of the specialty chemicals industry and developed sourcing specific strategies to deal with oligopolistic markets. They implemented best practices to drive down costs through network optimization and inbound logistics. Furthermore, the proprietary procurement delivery model helped the client ensure sourcing of specialty chemicals and achieve additional savings.

The specialty chemicals industry report offered further helped the client to understand changing asset structures and raw material base. New suppliers and supply arrangements were considered to establish early warning systems for supplier risks and increase supply chain transparency.

Engagement Outcome

The proprietary procurement delivery model helped the client to better control the procurement process and drive $ 15 million value within two months. Moreover, the centralized transactional procurement functions increased the productivity of the overall organization by 15% and enhanced the on-time payments by 30%.

Developing procurement delivery model is crucial for companies in the specialty to centralize procurement functions and achieve savings. Subscribe now to enjoy free access to our web-based platform.

Specialty Chemicals Industry Trends

Sustainability

Companies in the specialty chemicals industry are now operating within an ecosystem to ensure sustainability by reducing energy ad resource consumption. They are also focusing on raw material substitution and maximizing the use of renewables to achieve the aim of circular economy. 

Digitalization

Like any other major industry, the specialty chemicals industry is embracing the role of digitalization in innovation. Companies are capturing critical data and drawing insights to achieve lower costs, scheduling preventative maintenance to minimize downtime, and facilitating inventory planning to prevent stock-outs.

Innovation and globalization

The rising working-age population is driving the growth of specialty chemicals in emerging markets. Reducing product life cycles and the rush to commoditize products have increased the pace of globalization. This has led to the major shift of production facilities to Asia in the last two decades.

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