A German Chemical Industry Client Saved Over 25% of its Operating Costs with Market Potential Analysis

June 2, 2020

German Chemical Industry Overview

Robust growth of construction industry, oil exploration, and production activities are expected to propel the growth of the German chemical industry over the coming years. However, the German chemical industry is not completely free of challenges. Foreign companies in the sector are facing major setbacks in terms of growth and market share in Germany. Besides, lowered demand levels of chemicals, ongoing cost pressures, and changing asset structure are increasing challenges for companies operating in the German chemical industry. As such, German chemical companies are in the need to adjust to the new environment and find ways to achieve profitability. This is where Infiniti steps in with its best-in-class market potential analysis. By leveraging market potential analysis, companies in the chemical sector can identify lucrative opportunities and develop strategic plans to maintain productivity.

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Business Challenges Faced:

A global chemical company with 15+ production centers in Germany, struggled with decreased contribution margins, high fixed costs, and negative EBIT (earnings before interests and taxes). Also, external factors such as economic slowdown, increased competition from low-price products, and overcapacity issues negatively affected the company’s overall revenues. Besides, the German chemical industry client struggled to reflect the rapidly changing price of raw materials in its own pricing. The client, therefore, wanted to identify untapped market opportunities and revise their current strategies. Also, by keeping pace with market transformations, the client wanted to adjust to the new environment and find ways to achieve profitability. The client, therefore, choose to partner with Infiniti Research to leverage their expertise in offering market potential analysis.

By partnering with Infiniti Research, the German chemical industry client also wanted to find ways to become profitable within the industry’s new environment, innovate product offerings, improve financial performance, and revamp pricing strategies.

Integrated Approach:

The initial phase of the market potential analysis engagement involved identifying and reviewing innovation options. This involved conducting a market overview and customer value proposition analysis. Besides, this phase of the market potential analysis engagement involved performing competitive analysis.

Also, the experts at Infiniti Research worked closely with the client to understand their current strategies, sales performance, variable and fixed costs, production assets, investment plans, supply chain management processes, and financial performance. Secondly, our experts assessed sources of value and customer needs. Lastly, our experts helped the client to develop new tools, processes, and offers to tailor products to specific customer needs.

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Business Outcome:

Infiniti’s support helped the German chemical industry client on their journey to growth, improved profits, and enhanced capabilities. With Infiniti’s market potential analysis, the German chemical industry client was also able to develop value pricing tool and a performance-tracking dashboard. This helped the client in monitoring prices and in customer management. Within six months of leveraging our market potential analysis, the company exceeded its 12-month goals. The German chemical industry client was also able to improve spend data quality, visibility, and accuracy.

To reduce operating costs and run the operations smoothly, the experts recommended the client to consider outsourcing portions of functions to contractors. This helped the client to eliminate maintenance capital and save over 25% of operating costs. By understanding supply chain risks, managing cash outflows, developing a range of scenarios to predict future outcomes, and identifying local suppliers, the German chemical industry client was also able to safeguard the supply chain operations and reduce logistics costs.

By leveraging Infiniti’s market potential analysis, the client was also able to:

  • Identify lucrative market opportunities and revamp the business model
  • Keep pace with market uncertainties
  • Innovate product offerings and improve financial performance
  • Revamp pricing strategies to meet the changing demand

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