Due to the growing amount of digitalization nowadays, the procurement of chemicals is under transformation because the development of digitalization creates new channels to implement procurement process more advanced ways. Let’s go through some facts in order to get the idea of the global impact of chemical industry: according to the Deloitte, more than 20 million people are employed by the industry with worth of 5 trillion dollars of annual sales. Besides the facts, it is mentioned the challenges as well which include 4 topics: global market, competition, organization and emerging technology. Because of the challenges, CPOs, chief procurement officers, need to be up to date of the most efficient ways to keep up with the innovations of digital procurement, so they can reduce the costs and make the most out of the new online platforms.
The shift from domestic to global market
Digitalization is going to help to come up with smarter, faster and more flexible options to grow the business. CPOs are able to seek for both, business partners and customers, globally and seek new ways to expand. The transformation from the previous, domestic trade, to today’s international competition creates new opportunities for procurement process, which were previously much more challenging. As Wolfgang Falter, partner of Deloitte, states the fact that Western countries are shifting from producing to purchasing products from overseas, especially from Asian producers because of their low costs and efficient work methods. In Asia they are able to produce more with less amount of money. Even though it is more efficient, international trade requires more concentration on tariffs, taxes, and the safety issues. In international business high level of understanding about regulations and rules that apply between EU and other markets is extremely important in order to avoid big mistakes and losing a lot of company’s capital.
Paying attention to two important facts
As Accenture’s Managing Director Chris Pesci mentions in Procurement in Chemicals “being a master in the chemical industry requires procurement personnel to have a strong understanding of what they are buying and how they buy it.”, which emphasizes the fact that CPOs really need to be educated well enough about the rules which apply to international business and what the products are made of. Safety issues needs to be taken under consideration, since chemical products require much more higher level of knowledge than normal goods.
Different improving elements
As already discussed earlier about the new opportunities that are building up from digitalization, there are a lot of advantages making the growth of chemical industry quicker. In the article Chris Pesci discusses about different elements of digitalization affecting the procurement, such as:
The transition of procurement in the chemical industry has shifted a lot in a short amount of time, domestic market has expanded to a global competition where there are more challenges and requirements for the companies. They need to be ahead of the time, aware of upcoming trends to offer things customers do not even know the expect yet and as well beat the competitors. Western countries have decreased the amount of producing and focus more now on purchasing outside of Europe, since Asian countries are able to produce more with smaller amount of investments. It requires more knowledge from CPOs about safety and international affairs such as customs and regulations, but it is easier to gather information about those matters with today’s technology. Elements such as mobile procurement, cloud services and predictive analytics are a huge advantage for increasing the growth of the business. Professionals in these sectors working for chemical companies have many advantaged tools so they can take the most out of the new innovations to implement them to the company’s customs.