Five challenges that chemical companies must address in 2020

New technologies and new business models will mature to a scalable extent, while the industry still faces traditional challenges such as volatility. Dr Andrea maesen and Jan haemer, senior partners at Simon kucher & partners, have provided guidance on how chemical companies can deal with these challenges.

The chemical industry will face global macroeconomic trends and events, such as trade war, political disputes and recession risks throughout 2020. Simon kucher & Partners' chemical industry practice has identified five industry specific additional challenges that manufacturers must address.

1. new technology: by 2020, some technical improvements may eventually reach commercial level.

"R & D and technology may be ready, but manufacturers need to ensure that their business processes and teams capture the full value of these opportunities," maesen explained. Examples include emerging recycling solutions and improvements in EV Batteries. "

"Some companies have exciting innovations that will help fundamentally change the industry," Jan haemer added. Monetization of innovation and value pricing is not new to the game industry, but the existing opportunities are huge. The right pricing and sales will bring about significant differences. "

2. fast customization: there has been strong technical progress here. Manufacturers can use supercomputers to analyze the properties of materials and predict their interactions in the formula, while physical testing of samples and products takes a short time. Companies can develop better, faster, and more effective solutions.

According to maesen, this creates two opportunities: "the first is efficiency. If you have a lot of ongoing efforts in your research pipeline, you can now quickly test thousands of potential customer solutions. The second opportunity is to optimize marketing and sales resources to effectively commercialize the results. "

"Money is an objective way to decide what solution to pursue or what issues to prioritize," Hamel added. The ability to identify and quantify the value of these solutions is a key success factor. This requires greater cooperation and integration in sales and R & D processes than in the past. "

3. planning in the fluctuation: the vast majority of the revenue and profit of the chemical industry comes from standardized products. The more mature the product, the more vulnerable it is to the fluctuation of demand, which is caused by inventory and inventory removal.

Dr Andrea Mason clarified: "changing capacity, uncertainty around trade wars and the pursuit of lean supply chains worsen the situation, making pricing in these markets a challenge. Companies need better demand and price planning to manage volatility in a more disciplined and forward-looking way. This is another area of more advanced science and technology that can replace the "intuitive" decision. Advanced analysis and machine learning can now reduce the risk of being too radical in price and volume decisions. "

"The challenge in implementation is to provide better visibility and pricing and sales guidance to the sales team," haemer said. These technologies are assets used for sale, not replace them or reduce their responsibilities. "

4. digital market: digital market provides one-stop shopping services, such as Alibaba in China or chemondis in Europe. However, for chemical companies, digital market may be a double-edged sword. "The reasons for growth are very good because of this listing. In addition, they reduce the service costs of standardized products by substantially reducing transaction costs. However, if manufacturers are not clear about their market entry strategy, define their portfolio strategy, or calibrate their prices in a way that balances quantity and profit appropriately, they may amplify the impact of commercialization. " Heme said.

Andrea maesen said it was a huge opportunity: "preparing for this additional market channel will enable chemical companies to carefully arrange and shape their commercial products for customers in a more differentiated way and ensure a stronger and effective organization."

5. "chemicals as services": sensors and the Internet of things (IOT) generate data to improve customer and manufacturer visibility in process management, system application and use. For example, Yikang said they would not price by quantity, but would manage customers' wastewater. At the same time, paint manufacturers are committed to managing the surface of customers.