A warning to the chemical industry: use the power of digital tech or be left behind

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By Yoav Kutner, CEO, Oro Inc.

For many years, chemical manufacturers and distributors enjoyed a relatively stable industry.

However, driven by the impact of the Covid-19 pandemic, changing consumer preferences and grounded sales teams, the past 18 months have forced chemical companies to make a choice: use the power of digital technologies to drive growth or be left with an antiquated sales process that can easily be disrupted.

After being hit hard by supply chain disruptions and a severe drop in end-market demand over the course of the last year, more than 90% of executives in the chemicals industry expect1digitalisation to result in evolutionary, revolutionary, or disruptive change. 

The German Chemical Industry Association (VCI) recently stated that “the industry is gradually changing from a supplier of materials to a provider of solutions and services”, and a recent survey by EY shows that digitalisation in chemicals is starting to accelerate quickly. 

While the chemical industry has been on the forefront of driving materials innovation, notoriously it has been slower than other industries to move its sales processes online. However, leaders in the chemical industry are now beginning to push the button on the digitalisation of their business processes. In the boardroom, digital transformation is now viewed as more than just a means to improve efficiency or customer experience - digitalisation is now the catalyst for innovation and value creation.

Today, a new, more competitive environment is taking shape in the chemical industry. The industry is highly diverse, with companies that vary in size, geographic reach, business model and customer type; while evolving technology, developing business practices and ever-changing customer expectations are quickly raising the bar for the industry’s B2B practices. 

Chemical enterprises are feeling pressure from greater competition, rising commodity prices, changing regulatory requirements and most importantly the push for sustainability. These trends are driving the greater adoption of digital strategies and will continue to be a key investment driver in the years ahead. According to Deloitte2, high-performing chemical companies that derive the most value out of innovation typically utilise digital technologies to create a better customer experience. 

Chemical companies should be addressing today’s challenges by digitalising and analysing data with tools such as OroCommerce,  an industry leading out-of-the-box B2B eCommerce platform that includes features such as managing corporate accounts, displaying unique price books, showcasing buyer-specific catalogs, supporting Configure-Price-Quote (CPQ) processes, creating custom workflows and many more B2B capabilities. 

Digital transformation is disrupting B2B commerce in the chemicals industry, bringing in efficiencies through better price transparency, reliability of the supply chain, knowledge of the underlying chemistry and regulatory guidelines for targeting end applications. Companies and platforms must be part of these ecosystems if they are to be even remotely relevant across the chemical industry value chain. 

Azelis: an innovative leader 

An example of an organisation that has embraced digital technologies is Azelis - a specialty chemical and food ingredients distributor operating in 56 countries and serving more than 45,000 business customers, with annual sales of £1.95 billion. 

Azelis’ goal of becoming a leader and go-to name in the chemicals industry was achieved through a customer-oriented digital strategy. This strategy creates unique business opportunities for suppliers and exceptional service to customers. The Azelis growth efforts centre around sustainability, innovation, and digitalisation.

The chemical supplier focuses its digital efforts on growing relationships within its ecosystem and optimising complex supply chains. This allows the company to better understand various market trends, keeping the product portfolio and solution focus customer-centric.

Azelis has seen the benefits of its digitalisation efforts firsthand as their overall efficiency has increased.  Heli Kilpala, Group Strategy and Digitalisation Director at Azelis, says: “We have seen a twofold efficiency gain with digital tools, both for employees and customers.”

Digital tools such as ERP, CRM, MDM, PIM and eCommerce have enabled data centralisation. Centralising information around data governance and processes has eliminated many duplicated efforts. The result is added freedom from routine tasks, more time for value-added activities, better focus on customers and the agility to quickly react to trends.

As lockdowns took hold, Azelis focused on strengthening relationships with principals and partners while maintaining a high level of communication with customers. A digital-first approach meant that Azelis was well-equipped to pick up market activity, react to new customer needs, and plan production accordingly.

Azelis also took the opportunity to accelerate the deployment of digital platforms such as its e-Lab, a virtual collaboration center to optimise formulations, and a customer portal with both eCommerce capabilities, technical and informational insights.

Azelis customer portal

Traditionally,  chemical sales are an in-person activity. Azelis realised that moving some aspects online could improve the journey and experience for suppliers and customers. The process, however, wasn’t easy.

Regulatory and compliance requirements vary between locations and chemical products. Chemical customers must do extensive research and collect documentation about their products, so the discovery process can be long. Azelis utilised OroCommerce - with implementation partner Smile - to develop and implement a robust customer portal. Azelis, Oro, and Smile worked together to craft the ideal sales experience and then turn it into reality.

Today, the customer portal is the central depository where customers can find high-quality technical information, products, formulation, and samples. With the help of the customer portal, Azelis improves time to market by offering customers the most up-to-date information for their projects. 

According to Kilpala, Azelis’ customers “understand the wider product catalog and services we offer” and familiarise themselves with product technical data, requests samples and quotes from a single platform.

Through self-service, customers research and self-educate from location-specific catalogs, complete with supplementary and regulatory information. After ordering, they can review recent purchases, track shipments and reach out to live support when needed. The result is an entirely new, enhanced commerce experience.

The first portal launched in July 2020 and experienced rapid internal and external adoption. Since then, Azelis has been accelerating new rollouts every month, with 38 portals currently in operation. 

The portals are proving their value as a trusted resource for customers  – whether they’re looking for the latest market trends, researching product information, or checking their orders, they can do it all without leaving the customer portal.

The benefits of digitalisation

The chemical industry needs tools to face its market challenges.  An innovative, digital-first strategy enables chemical-sector companies like Azelis to dominate the specialty chemicals and food ingredients industry. Other companies are discovering digital commerce tools hold the key to resilience, customer success and innovation. 

 Here are just a few of the broad benefits that chemical distributors experience with digitalisation. 

Improved agility

The pandemic shattered global supply chains, leading many manufacturers and distributors to think more locally. Companies in the chemical sector need the agility necessary to pivot to new, adjacent markets as they are identified. Data informs insights into processes and production lines to identify where and when retooling future-proofs the company.   

Increased efficiency

Today, everyone from startups to tech giants leverages digital tools to enhance decision-making, introduce new products, and reduce data silos. As competition increases, brands will be pushed to increase efficiencies wherever possible, reduce costs, and preserve value. Digital tools automate processes, centralise data, and allow everyone to work more efficiently.

Enhanced customer experiences

Chemical companies must adopt a broad range of digitally enabled processes and practices to be more effective in marketing and reach customers.

In today’s digitally connected world, chemical companies are no longer measured by their ability to launch new products. Instead, experience leaders enhance customer journeys with greater transparency, shorter buyer cycles, logistics services, and other value-added products.

Covid-19 and beyond

The relative health and diversity of the chemicals market means that the industry will continue to grow through 2022 and beyond. While traditionally the industry has been a late digital adopter, we now have hard evidence that eCommerce sales have been on a growth trajectory in recent years. 

Long before the pandemic, the chemical industry was inching towards digital transformation at a glacial pace as a means to supplement offline channels. The impact of Covid-19 accelerated the development and adoption of digital technologies. 

Before starting the conversation with your digital commerce vendor, understand how your digitalisation strategy fits your organisation and ecosystem and identify how improved processes will benefit your partners and customers.

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