Chem distributors need to reconsider business models - FECC

25 June 2009 09:39  [Source: ICIS news]

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HELSINKI (ICIS news)--Chemical distribution companies must reconsider their business models and distinguish between commodity and speciality chemicals, an industry expert said on Wednesday.

Fundamental changes in the business environment should spur companies to reconfigure their supply chain rather than going for incremental improvements, said Roger van den Heuvel, a principal with consultancy Booz & Co, who spoke at the FECC Congress in Helsinki, Finland.

The drop in demand, ongoing commoditisation, shifting global footprints, industry consolidation and regulatory requirements mean that companies must adopt a long-term strategy, said van den Heuvel.

“It is not enough to take an incremental view and move into survival mode,” he said.

Petrochemical and commodity distributors are increasingly operating on a global scale and facing growing margin pressure as they follow their customers towards higher growth regions, according to van den Heuvel.

This trend will leave areas untouched for more niche commodity distribution by regional or local players, van den Heuvel said.

For speciality chemical distributors, enhancing customer intimacy is key for the future, he said.

“They must prove they are of value to the customer and become an integral part of the business,” he said.

The FECC Congress concludes on Wednesday.

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By: Elaine Burridge
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