Overview of the Specialty Chemicals Industry
Globally, the chemical industry generates a revenue of $3 trillion with a significant chunk of the contribution coming in from the Asian countries. Typically, the global chemical industry comprises of a diverse and complicated range of products such as specialty chemicals, agricultural chemicals, commodity chemicals. The specialty chemicals sector is driven by the increasing technological innovations and chemical expertise. Additionally, with the increase in the number of M&A across the specialty chemicals space, firms are focusing on realigning their offerings to improve competencies and generate higher revenues. Organizations are also increasing their focus on developing their core strengths and acquisitions to drive growth and achieve a higher shareholder value within the specialty chemicals industry.
However, the specialty chemicals sector is prone to a few challenges, including:
- Increasing competition: Today, staying ahead of the competitors becomes challenging as the threat of new entrants in the specialty chemicals space is relatively high. This sector is also witnessing competition from non-traditional sectors including the energy, mining, and utilities. To remain ahead of the competition, leading organizations are facing relentless pressures to offer product and service offerings while being cost-effective.
- Stringent protocols: Over the past few years, the specialty chemicals industry is witnessing regulations right from the manufacturing, labeling, and handling from the supply to storage of the chemicals. Additionally, the recurrent fluctuations in regulatory compliance are driving firms to migrate toward better ways to manage the cost of compliance.
These factors are compelling firms within the specialty chemicals space to leverage the use of strategic sourcing analysis. Strategic sourcing analysis help firms to speed up the procurement process and ensure the specialty chemicals industry achieve substantial profits. These solutions also assist companies in generating optimal sourcing and procurement measurement tools to drive savings across the supply chain.
The Business Challenge and Journey
The client, a leading specialty chemicals manufacturer, wanted to identify the right vendors and reduce procurement spends. The client also wanted to balance the increase their focus between strategic aspect and the transactional aspect of procurement with an aim to achieve long-term monetary benefits. Additionally, they were also on a constant lookout for innovative approaches to incentivize their channel partners.
To help the client reduce time and energy spent on transactional activities, the strategic sourcing experts at SpendEdge tailored an integrated research approach. The integrated approach included primary research methodology coupled with qualitative and quantitative data collection procedures. The experts also gathered information from a wide array of secondary sources such as paid, company presentations, industry forums, and industry database within the specialty chemicals space.
With the help of the strategic sourcing analysis engagement, the specialty chemicals client was able to implement new sourcing strategies and devise best practices across business units, thereby, helping them capture early payment discounts and realize higher savings. This engagement also helped them identify and achieve procure to pay (P2P) improvements that would eventually drive financial and product availability benefits.
Key questions answered in this strategic sourcing analysis engagement
During the course of this strategic sourcing engagement, the specialty chemicals industry client gained actionable insights into the long-term price validity coupled with the clauses to absorb currency fluctuations. This helped them reduce time and energy spent on transactional activities. Additionally, the client was provided with recommendations on a broad range of sourcing categories including supply chain categories, direct material, indirect material, and marketing and sales.