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
Changing 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 represent 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.