Chemical Digitalization: Threat Or An Opportunity?
Digitalization is changing the European chemical industry at a fast pace. McKinsey & Company (2017) have the belief to a significant impact on various areas within the chemical industry, which will, for example, lead to a higher amount of productivity, innovation and digitalization will also create new channels to the market. Alexander Lakemeyer, the CEO of PINPOOLS, and Christian Bürger, the CEO of chembid, were interviewed by Wolfgang Falter, the Global Chemicals Leader of Deloitte. The topic for the interview was digitalization in the chemicals industry and it included different aspects all the way from the current industry status, how to be successful in the business, and what can be expected from the future.
How to be Successful and Onboard New Customers?
Being successful and differentiating from competitors can be sometimes challenging, no matter the industry. To be successful, Lakemeyer emphasizes the right kind of mindset for digitalization within the companies. As they both agree, they don’t see chembid and PINPOOLS as competitors since the business model differs. Metasearch engine, like chembid, collects data from different external sources and digital marketplace, whereas PINPOOLS offers a solution where the full transaction is done on the platform. In 2019, PINPOOLS started a collaboration with the Dutch TankContainerFinder.com, which is specialized in the logistics of tank containers and cargo. As Ni Business Info (2019) states, collaborations are a powerful tool for the companies since combining the expertise and knowledge will be beneficial for the businesses. This is also useful for the customers because it improves the user experience.
PINPOOLS, which has its biggest market area in Europe, aims for the most relevant customers and products on its platform “Our ambition is not to cover all the products within the chemical industry. We are focusing on these products where you can have a transaction between the buyer and supplier on the platform.” states Lakemeyer. Concerning the process of onboarding, Lakemeyer describes that supplier companies often more complicated process than buyer companies “Onboarding suppliers might take from half an hour to one and half year. For the buyers, this is a faster process to register and start directly with a request for quotations.” Apart from onboarding new users, retaining the existing ones is an important part of the business.
Trading in the Chemical Industry is Shifting to Online
Digitalization is changing the chemical industry and as Lakemeyer states that even though the share of marketplaces in Europe is still quite small, the chemical industry is one of the fastest-growing industries within Europe. “The European market is 500 billion euro big, so we are convinced that some single industries within the big market will have a chance to build their marketplace” and PINPOOLS wants to be part of this in the future.
The marketplace has covered industries such as paints, coatings, construction, food, and feed. Regarding the product categories, solvents have the greatest demand on PINPOOLS platform. The online sales for specialty and commodity products Lakemeyer describes the different answers when asked from ten suppliers. He also emphasizes the importance of educating the salespeople for digital sales and therefore the online sales of specialty products are possible as well as the commodities. The right kind of mindset for digitalization within the organization and educating employees makes them excited about digital sales.
Millennials Have Changed the Way of Business Communication
There is a rising amount of millennials in work-life who are more into digital solutions. The older generation has preferred the traditional ways of communication, such as phone calls, but the youngsters pick the keyboard over the call. According to Harvard Business Review, 88% of the Millennials regularly check their email by using their mobile phones. This is why in the future the chemical buyers will search and find digitally new suppliers and products. Lakemeyer notes that digital marketing and sales in the chemical industry will be highly correlated to each other and also gives an example of Shop in Shop and marketing functions on PINPOOLS Marketplace “Shop in Shop means that every supplier has the ability with a few clicks to build own shop and to buy a certain marketing budget to promote the brand on PINPOOLS Marketplace.” The important factor for the organization leaders is to find the people within the company who are especially interested in digitalization and those people will deliver the strategies, the organization’s resources shouldn’t be considered as a challenge. “What is the worst thing to happen? You can do sales and turnover, it’s not that dangerous.” Lakemeyer notes.
Does the Data Stay Safe and What Happens if Company Won’t Digitalize?
The role of data analytics is going to be a vital part of digitalization within the chemicals industry and using the data in a correct way can be very useful for the businesses. PINPOOLS takes advantage of the big amount of data existing on the internet and the user knowledge about the product price levels and this can be taken advantage of price statistics and forecasts. For the users, these are valuable information because they will educate the users for current status such as where the product price level is going and whether it’s going to decrease or increase in the future. However, the concerns of sharing the data rise together with the amount of collected data. This is an important topic for PINPOOLS and as Lakemeyer states, the user data is not given outside of the company.
What happens if a company doesn’t follow the digitalization? Lakemeyer mentions that it takes time to get used to digitalization, but the change has been seen during the past 10 years already. “Before setting a digital strategy, gain a clear understanding of your point of departure, industry, and unique advantages and capabilities.” Bain & Company. (2017). The digitalization is reaching people and companies on a global level, which makes the collaboration easier and the customers have an advantage from this as well. Matching the knowledge and advantages of companies together creates a bigger value for the users and improve customer satisfaction.
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