16 May 2013 18:23 [Source: ICIS news]
JERSEY CITY, New Jersey (ICIS)--Understanding complex value chains stands as one of the main challenges for chemical producers, a principal at Berger Strategy Consultants, said on Thursday.
Speaking at the ICIS 3rd World Surfactants Conference, Gillian Morris said: “Looking at the value chain – industries are struggling with profitability and growth, leading to lack of visibility into unmet needs. Producers are not close enough to the retailer and, ultimately, customer.”
Morris said that it was going back to “basics” with its customers - working on basic costing projects and basic marketing projects.
“Some of our customers are selling to so many customers they don’t actually know the needs of their own customers.”
Morris gave the example of a large commodity producer struggling with a low margin, low volume and low price product.
“The product was a pain and the company tried to exit the business by rising its price by 25% in one quarter and the customer came back. So the next quarter it raised its prices again by another 25% - so that’s a 50% increase in six months.
“In the next quarter they moved up again by 20% and then the customer started to ask questions because their customers wanted to know what was going on in the market…. This company had no clue why the product was of such value to the customer.”
Morris did not disclose the name of the producer or the product involved.
Morris said many companies know little about the value of their product to their customers.
“The value chain is very complex and often our customers are divorced by two or three steps from the customer,” she concluded.
The ICIS World Surfactants Conference runs 16-17 May in Jersey City.
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