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Chemical market analysis

Navigating Complexity for Specialty Chemical Companies: 8 Major Roadblocks and How to Over Them

With plummeting profitability and increasing market competition, specialty chemical companies are undergoing several unique challenges. They must identify strategies to pull through such roadblocks in order to survive in the long run.

The global specialty chemicals market continues to expand at a rapid pace. This growth has been underpinned by factors including increased productivity, sound business models, and portfolio restructuring. However, market growth isn’t exactly good news for the existing companies in the specialty chemicals industry. The flourishing market means that it would draw in more players and add on to the competitive pressure in the industry. Therefore, survival for specialty chemical companies greatly depends on understanding the most pressing challenges and leveraging insightful strategic planning to overcome them.

Key challenges facing specialty chemical companies 2019

specialty chemical companiesChanging business portfolios

Specialty chemical companies are increasingly being transformed through increasing product diversification and rapid merger and acquisition activities. Business portfolios of specialty chemical companies are constantly changing as producers add and dispossess divisions, engage in new market entries, and participate in mergers. Moreover, globalization has increased the business portfolio complexity of specialty chemical companies.

Dynamic demand patterns

One of the key challenges faced by specialty chemical manufacturers is uncertain and unpredictable demand patterns. They also have only limited visibility into future customer orders. The growing customer portfolios spanning over several end-use markets and visibility into demand variability represents significant challenges for specialty chemicals manufacturers.

Specialty chemical companies are currently facing several unique challenges. Fortunately, there are some strategies that specialty chemicals producers can take to support success. RFP for more insights.

Expanding product portfolios

In order to increase differentiation, strategize new market entry, and maximize customer loyalty, specialty chemical companies are continuously experimenting with new product innovations. New product introductions coupled with frequent adaptation of existing products have caused a significant rise in the number of products produced, consequently, leading to greater operational complexity.

Regulation and compliance

Specialty chemicals manufacturers are increasingly facing issues in documentation and certification of product quality and procedural compliance. These issues are largely driven by government regulations, end-use market requirements, or specific customer requirements. Furthermore, batch and lot level traceability requirements are becoming common in several segments and add to the complexity of operations.

Increasing customer intimacy

Specialty chemical companies are increasingly adopting the trend of moving closer to their customers by offering them tailored products and customer-specific service arrangements. Although moving closer to the customers has been a source of differentiation for specialty chemical companies, it has resulted in increased complexity of other business operations.

Get in touch with an analyst to know how we help clients in the chemical industry to keep track of market challenges and learn how our tailor-made solutions can help overcome major roadblocks in the market.

Industry price changes

The raw materials used by specialty chemical manufacturers are often priced on the higher side. The market fluctuations between countries often leave manufacturers vulnerable to the associated price drops. For instance, the 2014 shale gas price drop in the US resulted in heightened competition in Europe. This placed additional pressure on manufacturers in an already high-pressure market.

Growing demand for multi-stage manufacturing

Customers are increasingly seeking specialty chemicals that can only be produced through complex, multi-stage, multi-product processes that require more time to complete and an extensive list of components. Both of these can largely cut into the profit margin of specialty chemical companies.

Technology upgrade requirements

Most of the digital technology available today can be both a boon and a bane for specialty chemicals companies. While tools like IoT, artificial intelligence, and blockchain provide several advantages, implementing and integrating them into existing processes can be a time consuming and labor-intensive process.

Learn more about Infiniti’s tailor-made solutions for specialty chemical companies

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How can Chemical Engineering Save the World from Climate Change?

The climate change phenomenon has been lingering around for a long time. Specific human activities have contributed to the increasing concerns of climate change, which is often referred to as global warming. The release of greenhouse gases has caused the average global temperature to rise by about 1°C since 1880. It may not seem a lot, but it has caused the Antarctic ice sheets to melt, and raise the sea level by about 12 inches in the last 50 years. The citizens of today need to be more cautious with greenhouse emissions and chemical wastages to control global 123warming. So how can chemical engineering contribute to the environment and save the world from climate change?

Energy efficiency

One of the easiest way to control emissions is to do more with the same amount of input. A majority of the energy produced today is wasted in the form of heat, water, or other emissions. The chemical sector being the most energy-intensive needs to take initiatives to improve energy efficiency. Chemical engineering can figure out ways to improve the overall efficiency within the chemical industry.

Renewable energy

The chemical industry currently has a large carbon footprint, which is negatively impacting climate change. A straightforward way to reduce such carbon footprint is the use of renewable energy in the form of solar, wind, and water. However, the problems with such renewables is the matter of cost-efficiency as such technologies have an enormous upfront cost. Chemical engineering can solve such problems of cost efficiency by working on ways to produce low-cost renewable energy sources. For instance, using spray-on solar cells can improve its ability to capture and retain more energy than usual.

Nuclear energy

Nuclear energy is also considered to be a renewable source of energy and has been contributing towards decarbonizing the global energy economy. Its ability to provide power on a continuous basis without emitting greenhouse gases is proving vital in controlling climate change. Chemical engineering plays a vital role to ensure smooth operation of a nuclear power plant as they ensure efficient plant design, standards of safety, and higher environmental performance.

Energy storage and grid management

There’s a lot of factors to consider in the process of efficient power distribution. The process starts right from energy generation and extends till storage and distribution. In case of solar and wind energy, peak performance occurs at certain times, and such energy should be stored in batteries. Improving the efficiency of such batteries can translate to improved power management. The chemical engineering sector is making progress in the development of efficient batteries, which waste less energy during conversion and has higher storage capacity.

Sustainable food

Although it looks innocent, the food and agriculture sector is one of the largest contributors towards greenhouse gas emissions. The emissions come from livestock such as cows, rice production, and agricultural soil. Livestock accounts for the majority of the emissions, with the release of methane and nitrous oxide in the atmosphere. Chemical engineering can come to the rescue by designing fertilizer in a low-energy way, reusing food waste, and making food production more efficient.

Sustainable bioenergy

As the world gets depleted of their fossil fuel reserves, scientists start looking for alternatives, of which biotechnology seems very promising. However, certain challenges need to be overcome to produce energy from food crops like maize and sugarcane. To save the world from climate change, we need to turn towards chemical engineers to develop efficient technologies and make bioenergy production cost effective.

For more information on how chemical engineering can save the world from climate change, chemical engineers, and greenhouse gas emissions:

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Infiniti’s Industry Risk Assessment Solution Enables a Renowned Chemical Engineering Equipment Manufacturer to Mitigate Potential Risks in the Market

Globally, the chemical industry employs approximately more than 10 million people and enables indirect employment for over 50 million people.

The global chemical industry is highly reliant on new technologies to gain a competitive advantage and improve their cost margins. Moreover, with the growing demand for chemical engineering among the end-user segments, prominent businesses are planning to invest heavily in research and development. Also, leading organizations are planning to refine their existing architecture to improve their production capabilities and reach out to the target audience in an agile and seamless manner. The growth of the chemical engineering space can be attributed to factors such as the extensive use of the application in the fields such as climate change and environmental systems.

Here are some of the factors that may curtail the growth of the chemical engineering space:

  • Relentless competition: In this relatively competitive environment, staying ahead of the competitors becomes a challenging task. Especially, when the competitors are from the non-traditional sectors such as the energy, utilities, and mining. Prominent businesses should focus on effective ways to stay relevant and on top of the competition. In the chemical engineering space, businesses should consider streamlining their business processes to increase agility while controlling the overall costs.
  • Keep pace with the regulatory changes: The chemical industry is witnessing the implementation of regulations pertaining to labeling, handling, and manufacturing to the shopping and storage of the products. Since the extensive usage of chemicals has an adverse effect on the health, governments are implementing stringent control measures to curtail the use of chemicals and its impact on the environment.

To counter such challenges, businesses are utilizing risk assessment solutions. Industry risk assessment solution helps businesses identify the potential risks in the industry and devise effective strategies to improve the business decisions.IR_Brochure

The Business Challenge

  • The clientA renowned chemical engineering equipment manufacturer

The client, a renowned chemical engineering equipment manufacturer, wanted to understand the current market performance and identify hazards to devise an effective risk management plan. With the help of Infiniti’s risk assessment solution, the client wanted to understand the risks in the industry and identify the potential opportunities to enhance their position in the chemical engineering market space.

Industry

Want more information about our industry risk assessment solutions

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Our Journey

To identify and assess the risks based on priorities, the risk assessment experts at Infiniti followed an extensive research methodology comprising interviews and discussions with leading stakeholders in the chemical engineering equipment space. Additionally, to devise a robust risk management plan, the experts also compiled information from reliable sources such as trade shows, paid industry databases, and company presentations.

The Solution Benefits and the Business Impact

The risk assessment solution offered by Infiniti assisted the chemical engineering client in evaluating risks to enter the most profitable region. The client was able to gain deep dive insights into the preferences of the customers and accurately position their products to meet the business requirements. The engagement also helped the chemical engineering client develop alternative risk assessment plans to curtail any disruptions and improve product performance.


A must-read case study for strategy specialists and decision makers looking to develop an understanding of the chemicals industry.

IR_RFP


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