According to a 2015 report released by Roland Berger, the global market volume for chemicals is expected to more than double by the year 2035. In that light, it’s a good time to make a successful business in the chemical industry.
Moreover, the modern life largely depends on chemicals – cleaning, cooking, food preservation, agriculture etc. However, despite the fact that chemicals are something that everyone desperately needs, it is normally quite challenging to make a success in the chemical business.
This is attributed to various factors, including low margins, strict industry regulations, unstable prices, global competition, as well as multifaceted logistics. Here, we present you 5 valuable tips to help you overcome these challenges and make your chemical business a success.
Fully Utilize the Available Assets
In the world of chemical business, assets are highly capital-intensive. As such, it could be an imprudent business practice if you don’t utilize those assets to their maximum capacity. For instance, larger and more established companies are re-evaluating their plant equipment, creating long-term strategies for their improvement and development.
These companies are also beginning to place more value on their databases, regarding them as assets in their own right. Proper utilization of the information in the databases may result in new co-operations in various markets or help source affordable suppliers from new areas.
Capitalize on Sustainability
One of the most effective ways to maximize profits in a market with low margins is to utilize sustainably. As chemical usage increases, you need to find raw materials from sustainable sources in a bid to lower costs. This will also play a great role in sales in light of the fact that consumers always prefer environmental-friendly products. Likewise, recycling waste chemicals will not only minimize the cost of production but also provide additional revenue streams.
Set Yourself Up for Growth
To make success out of your chemical business you should embrace the significance of exploring new markets across the globe. In fact, established chemical businesses are always figuring out how they can expand, by either broadening their product base or by going up/down the supply ladder. You can also think of alternative uses for your products, which could bring in customers from otherwise unexpected areas.
Uphold Knowledge and Aptitude
In many industries and businesses, the people who make up the workforce are an integral asset. The chemical industry is typically technical and often specialized. The knowledge acquired by your workforce should be jealously guarded, even if it means paying a fortune for to retain. This is because understanding your products, your market, as well as the contact details of your prospective customers can be of great significance in taking your business to the next level.
Supply Chain Flexibility
The chemical market is quite unstable, with frequent and intermittent price fluctuations. In light of this, it is imperative that you have the capacity to quickly respond to any changes in the market. This is especially important because the chemical industry is a global one, with customers and suppliers normally continents apart. Circumstances can change overnight owing to socio-political and natural factors, such as natural disasters, enactment of new legislations, trade restrictions, etc.
Having the ability to quickly find new suppliers, change to alternative raw materials, and use alternative systems of delivery, will help you keep up with competition.
These tips are obviously a simplified guide to a business with lots of complexities. Therefore, in addition to these tips, it is advisable to observe how the more established chemical companies conduct their business, and then consider structuring your business model according to their practises. Being a member of CDMA could also be beneficial in this regard.