Within the chemical industry, the role of distributors is evolving in response to changing demand: more companies need better services, specialized products, or precise and typically smaller quantities than in the past, which may not be in the manufacturer's best interests. Distributors can offer tailored quantities along with bespoke products and services that manufacturers cannot always provide. Procurement organizations considering “Distribution Chemicals” as a category in itself, with its own sourcing and category management strategies, can gain a strategic advantage.
Important benefits can be achieved through strong partnerships with distributors, including financial gains, improved customer service and greater governance. However, these opportunities are often left unexploited due to four main issues: a lack of strategic focus and priority, a limited understanding of spend, minimal supplier empowerment and limited internal communications.
Understanding this complex and evolving industry has enabled unprecedented gains for several of our clients. This paper reviews key trends and explains how companies purchasing chemicals can quantify their true distribution chemical spend, surmount the constraints of this market, and develop mutually beneficial partnerships with distributors.