Shaping Successful Partnerships
Relationships between Distributors and their Principals and Customers are Getting Increasingly Sophisticated
In today’s competitive global market, chemical distributors face not only growing compliance demands but also strive to increase the added value to their partners in the supply chain. Under the theme “Shaping Successful Partnerships” the FECC Annual Congress 2018, to take place in Nice, France, June 4-6, aims to provide inspiration to the delegates considering how to boost their relations with the suppliers and customers in order to successfully face the challenges ahead. Michael Reubold asked Neville Prior, president of the European Association of Chemical Distributors (FECC), about the market trends driving this need for greater collaboration in the chemical supply chain.
CHEManager: Mr. Prior, for many years, chemical distributors have stressed the need for more collaboration in the chemical supply chain in order to seize market opportunities and new develop business models. What, in your opinion, are the current market trends that drive this development?
Neville Prior: The chemical distribution industry has always held the belief that the most successful principal-distributor relationships are those where a true partnership is forged. Manufacturers have many reasons to use distributors, such as gaining market access and insight, reducing complexity, accessing added value operations etc., but all these benefits become far greater when a true partnership exists. Our world is getting ever more complex, and whilst we see globalization continuing, we also see more complexity emerging on a national or regional basis. Good distributors are well placed to deliver services across that broad spectrum to their principals and downstream customers alike. No longer is it sufficient to simply deliver pre-packed goods to a customer on time. Today the suppliers and distributors need to provide bespoke packaging and labeling, tailored blending of products, technical support of products through laboratory facilities and dedicated technical staff, have sustainability at the heart of their strategies, embrace the opportunities of the digital age and provide best-in-class customer service.
How are the expectations of the suppliers and the customers changing, and how will it affect the role that chemical distributors play in the future?
N. Prior: Expectation only ever goes one way: up! The sorts of things that not so many years ago were differentiators, ISO9000, on-time delivery, and even a website, are a given. Today, customers and suppliers are ever more sophisticated, their requirements are increasingly comprehensive, and there are ever more stakeholders in the supply chain to satisfy.
Suppliers want to reduce their complexity and concentrate on those things that they are best at. Customers want support across the technical and regulatory playing field, require reliable delivery and quality, provision of timely information and bespoke services: customers want help to grow their own businesses! All of this means that distributors need to continue to evolve their relatively simple business models into being ever more sophisticated.
How does the chemical distribution industry prepare for the role they have to play in the future?
N. Prior: I think that this necessitates leaders of businesses to step up and review the vision for their businesses in the future. With technology ever evolving at a faster pace and the demands of manufacturers and consumers changing, now is a pivotal time. Leaders must be clear about the future and communicate what that future looks like to their staff and stakeholders, the rest is strategy and tactics! What is certain is that the industry will continue to develop and I believe grow: but only the very best organizations will benefit. The industry will need to embrace change, invest in people, technology and assets: if it does so then there is a great future.
‘Chemical Distribution 4.0’ has become a buzz word to characterize the evolution of new business models in the sector. Which trends and developments are driving this change?
N. Prior: At the present time there are many drivers of change in the industry. An ever increasing focus on security, is concentrating focus on having robust and safe supply chains in order to combat the terrorist threat. We see ever increasing co-operation between the industry bodies and Governments and NGO’s. There is also an increased focus on the environment and communities, and initiatives such as the Circular Economy in the EU, the UN Global Compact and industry initiatives such as Together for Sustainability, are encouraging companies to think carefully about their Corporate Social Responsibility strategies. Of course the topic that headlines in the press regularly concerns digitalization. This is a topic that continues to grow, and the rate of growth will undoubtedly increase.
How well prepared is the chemical distribution industry for the challenges of ‘Chemical Distribution 4.0’ that lie ahead?
N. Prior: The industry probably finds itself in various stages of preparedness. There are those who have embraced the challenge, and who are actively working on e-platforms, stream-lining supply chains and creating a strategic vision for the 4.0 future. There are others who are simply saying that it “won’t affect me”. The truth of the matter is that this has the potential to create a fracture in how our industry progresses, and it will bring threats and opportunities for all. One of the positive things that FECC can do, is to bring that realization to light, and encourage members to think deeply about 4.0 and their positioning to it.
Digitalization has proven in many industries to be a disruptive force, providing entry points for new market participants. How, if at all, can the chemical distribution industry turn these challenges into opportunities?
N. Prior: The chemical distribution industry is well run and takes on board its strategic position in the supply chain, and all that implies with regard to health, safety and the environment. The industry is also one populated by a number of entrepreneurs, and in my experience, is an industry that looks to find opportunities where it can. Digitalization may indeed be a disruptive force, but it offers the opportunity, amongst many, to streamline supply chains and drive cost down, to reassess current business models, to allow distributors to reach out to many more potential customers through e-platforms coupled to on-line marketing, and to enhance visibility of the industry. Challenges may be there, but this is a difficult industry to understand, and I would see the opportunities being far greater.
How is the FECC educating and supporting their members in adapting to their new role in a changing market and competition environment?
N. Prior: FECC is and has always been committed to helping our members understand the environment in which they operate. This may be around regulatory issues and constraints, or it may be around the emergence of new business models and business environments. FECC regularly informs members through its website, regular publications and e-mailed update communications. Working through a focused committee system, FECC is well placed to pick up on changes as they happen, and hence keep members informed at an early stage. FECC of course has its Annual Congress, where some of the big issues are looked at, discussed and analyzed, in a unique atmosphere where opportunities to network are significant. These things combined with seminars at the FECC’s offices in Brussels allow our members to keep abreast of trends, and be able to discuss these topics with industry experts.