Design Thinking & Pricing: Specialty Chemicals challenges & opportunities
Today’s specialty chemicals companies have to consider many factors that together can constitute challenges. Without listing them all, we can consider some headache’s cornerstones. First the costs volatility of raw materials, energy and commodities. Second, the environmental concerns with increasing pressure to discontinue some productions. Third, the continuous back and forth between great financial /production results & downturns resulting in plant temporary shutdowns, employee’s reductions…
Now this context triggers great opportunities.
- Cost control & visibility:
- Your company needs to built close to real time costs monitoring. Purchase costs, raw materials, energy, commodities. Advantages: anticipate positive & negative variations. Other advantage is the ability to assess on permanent/automatized way basis whether the agreements in place with both suppliers & customers’ need to be reviewed.
- Data valorization:
- The amount of data already in possession of specialty chemical companies is often large. Gathering these data & analyzing these data can create competitive advantages: Increase power in supplier/customer relation. Identify the opportunities when buying & selling. The most impactful advantage might be in Pricing, as 1% increase in your selling prices will have a much bigger impact than 1% decrease in costs.
- Innovation stimulation:
- Even if the chemical industry is R&D intensive compared to other industries. Today, the question of innovation became even more central with the growing environmental concerns. Design Thinking can play a pivotal role in designing processes & strategies that create more value for the company, customers and regulations compliance. That later will also bring value both in terms if environmental impact & image. These value driven innovations will increase customer’s willingness to pay.
Up & downs are generally well handled in the industry. Although in some areas it is possible to do better.
We have identified 3 key areas:
- Cost control & visibility
- Data valorization,
- Innovation stimulation
With the right processes in place, it becomes much easier to digitized and harvest the gain. Making innovation, purchase, production and Sales decisions that will create value & limit losses. Design Thinking & Pricing can help getting there.
You can apply these Design Thinking & Pricing strategies for polymers, fragrances / flavors, adhesives, cleaners
Design Thinking & Pricing: Specialty Chemicals challenges & opportunities 2020
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Author Baydhir Badjoko, https://www.linkedin.com/in/theconsultants