THOUGHTS

Procurement Intelligence in the Chemicals Industry

Jul 14, 2017

The chemicals industry often encounters trouble in procuring the right raw materials of the right quality at the right price. In the case of specialty chemicals, the purchasing expenditure can go as high as 60 percent of what is gained as sales revenue. Pricing is a highly volatile aspect in the global chemicals industry, which makes it more important for stakeholders to adopt the right procurement intelligence solutions.

Procurement challenges facing the chemicals industry

There are both demand and supply-side bottlenecks in the chemicals industry. Even though the market for chemicals raw materials has been developing since the year 2000, the transportation expenses backed with delay in lead times have emerged as a major impediment. Similarly, being a high niche industry the demand-side often faces challenges in the form of complex product requests and inflexible production systems.

The right procurement strategy is sure to bring a huge difference in the purchasing plan of the company. For instance, companies can bring down the overall spending by up to 10 percent and boost their earnings before interest and taxes (EBIT) by around five percentage points annually.

Procurement intelligence to the rescue

Though many chemicals companies have hired procurement managers to build an agile purchasing strategy, procurement intelligence is sure to improve their overall sales plan. By segmenting the entire purchasing process based on value and strategic importance, players in the chemicals industry can capture a major share of the market and beat the competition. Also by employing purchasing optimization tools, procurement intelligence helps players in the chemicals industry to overcome traditional roadblocks in the industry.

Procurement intelligence also improves the savings in the indirect categories like IT and communications, facilities management, and office supplies, by as much as 25 percent through the right distribution of resources. It even helps in containing the volatility in the market, especially in the chemicals market. By imbibing best procurement practices, procurement intelligence enables companies to overcome both demand and supply-side challenges and emerge as major players in the global chemical industry.

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