07 June 2010 17:29 [Source: ICIS news]
By John Baker
In today’s challenging economic climate, should distributors now be thinking more about consolidation and focus, or should they continue to push for greater scale? But then you have to ask, is there a limit to size arising from the associated complexity?
And complexity there certainly is.
Or take the pan-European distributor Azelis. It handles 30,000 products, with an aggregate volume of 1.3m tonnes/year, and boasts 40,000 customers. The complexity is reflected in its matrix structure that sees the company organised across eight application-driven markets and seven geographical units in
Still not convinced? Consider
And all the time, there is a need to remain close to suppliers and customers and, especially with specialty distribution, to provide extensive technical support and product development. Leading players will even be attempting to create further value by differentiating their service offerings to individual customers.
Modern IT systems make the management of such complexity feasible but there have to be sophisticated internal barriers to the leakage of customer and market-sensitive information across the huge number of client accounts. Joris Coppye, CEO of Azelis, believes this complexity has to be managed and, indeed, can be managed.
Coppye argued at last week’s FECC annual congress in
Given the number of distributors in Europe – three times the number found in North America - there may well still be scope for consolidation in
Several speakers at the FECC congress pointed to faster growing chemical demand in Africa and the
His advice for distribution companies wishing to grow was to focus on M&A activity in Europe and to go outside the region for organic growth.
Speakers from IMCD and REDA Chemicals also highlighted the growing opportunities in north Africa and the
Saudi Arabia-based REDA, for instance, operates in 17 countries across the Middle East and
This brings us back to the question of complexity in the chemical distribution chain. Increased scale will certainly be necessary to ensure sustainable growth. But growth will inevitably increase complexity. Perhaps management of this has to become a core competency of the successful players.
If several of
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