Obstacles that special chemical products companies must overcome

The global special chemical products market continues to expand. It is estimated that by 2020, this number will exceed $1 trillion. However, the expected growth has not made life easier for specialty chemicals manufacturers. In fact, it is attracting more producers into the market, which means that the competition in the industry is actually more intense than ever before. Therefore, it is essential to understand the most pressing business challenges and use deep strategic planning to overcome them.

In recent years, the specialty chemicals business has become much more complex. To be competitive, companies must have a plan to overcome many of the barriers between them and their financial goals. These include:

Fast changing product mix. From consumer demand that drives product line diversification to mergers and acquisitions, the product mix that has remained stable over the past few years or even decades is now changing regularly. Nowadays, it is difficult to find a special chemical products manufacturer that has not integrated or spun off its business recently. It’s a challenge for everyone from the product development team to marketing.

Promoting globalization. While overseas markets offer important expansion opportunities, they also present a wide range of challenges from logistics to compliance. Therefore, deciding how to enter and support emerging markets is an important element of strategic planning.

Lack of visibility into requirements patterns. No industry can predict demand completely accurately. However, in the specialty chemicals industry, it is particularly difficult to predict how the market will rise or fall, which poses challenges in all aspects from raw material acquisition to staffing.

The demand for multi-stage manufacturing is growing. Customers are increasingly looking for special chemicals. These chemicals can only be produced through complex, multi-stage and multi product processes, which need more time to complete and require a long list of ingredients. Both of these situations will reduce the profit margin.

Rapid development of regulatory requirements. Although regulation has been relaxed in some areas in recent years, new requirements have been added and / or existing rules have been modified in other areas. Keeping up with changes and ensuring compliance with process requirements and product quality standards is very challenging.

Increased expectations for tailored products and services. Many specialty chemicals manufacturers have gained market share through their willingness to work closely with customers to customize products and services related to their production and delivery. Manufacturers who do not have more partnerships with their customers feel compelled to do so.

The goal of sustainable development. The raw materials for the production of special chemicals are limited resources. It is very important to ensure that there is no waste in the production process. Environmentally friendly and sustainable practices related to energy consumption, waste disposal and water use are also important. While all organizations see these as valuable initiatives, they must be addressed while trying to remain competitive, which may stretch the company’s resources.

Technology upgrading project. For specialty chemicals companies, the list of digital technologies available today can be a blessing or a curse. While tools such as the Internet of things, artificial intelligence, and blockchain provide many advantages, implementing them and integrating them into existing processes can take a lot of time and effort.

Pressure to raise prices. As Forbes points out, chemical companies are not particularly confident in product pricing decisions. However, in the face of the rapid rise of raw material costs, transportation rates, tariffs and other factors, in order to maintain its profit margin and market share, special chemicals manufacturers must make strategic planning around its pricing structure.

Fortunately, specialty chemical products manufacturers can take some steps to support success. First of all, they must develop and promote differentiated products to make themselves different. Second, they need to work in efficient facilities that are designed and built with agility and flexibility. In addition, they must develop effective processes for effective inventory management and timely delivery of finished products. And they have to provide careful customer service at all stages of the business.

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