Why global supply chain integration is trending
As coating technologies become more complex, due to consumer and brand owner demands for even higher performance combined with greater sustainability, so the product development process gets extended. Responding to this, resins & coatings formulators are finding new ways of getting their products to market quicker and more efficiently. In addition, more stringent global environmental legislation e.g. for lower VOC and the removal of hazardous material is intensifying the pressure in the supply chain to quickly adapt or change to new sustainable and/or safer formulas.
The growing trend for greater supply chain integration is an attempt to shorten time-to-market and become more responsive to brand owner, consumer and legislative demands. Geography also plays a role in the integration decision as the expansion of APAC markets are creating growth opportunities for resins & coatings particularly in the construction and automotive sectors. Add to this the globalization of major customers and you could face pretty stretched supply lines without some global and local support.
Market research and industry experts highlight three main commercial reasons behind the supply chain integration trend
1. Manage the supply risk posed by globalization and geographic expansion
Resins & Coatings is predicted to grow both in market size and expand globally. These twin factors place a premium on the secure supply and availability of critical raw and scarce materials. The effects of globalization and fast growth in APAC in particular often demands greater supply chain integration to reduce the supply risk, strengthen business internationally and, most importantly, support new customers effectively. *
2. Reduce costs and increase competitiveness
Reducing the costs of doing business, whether by lowering overheads, greater supply efficiency, reducing processing costs, reducing development costs or improving productivity are all powerful financial inducements driving greater supply chain collaboration.* Collaboration is also becoming important in dynamic market segments where you need to be in a competitive position to respond quickly to brand owners and fast-changing end users demands for better performance and greater efficiencies*.
3. Speed up time-to-market and supply chain responsiveness
Formulators are realising that tighter supply chain collaboration can leverage new technology and get new products to market quicker, which in turn allows them to respond to value chain demands more efficiently. ** New technologies, such as smarter or more sustainable coating innovations, are more complex and take longer to develop, so by combining expertise in the value chain the development process can be shortened significantly. This allows formulators and producers to not only respond quicker to end consumer demands but also differentiate their offer.**
Adapting to new market dynamics
Liv Winterberg, Customer Service Director, EMEA at Perstorp AB shares her reflections from a supply chain perspective: “In today’s digital world, the rules of customer engagement are changing. To continue acquiring and retaining customers, we need to recognize this and adapt to these new dynamics. The possibilities the supply chain integration will give us going forward, will be curtail keeping our competitiveness.”
Jonas Heydl, Vice President Procurement, at Perstorp AB gives his view from a sourcing perspective: “In order for Supply Chain Organizations to keep on delivering sustainable value over time it requires close collaboration with its key stakeholders both upstream and downstream and true collaboration can only be achieved in an trusted environment that is built upon agility, transparency and with a win win attitude for all involved parties.”
Whatever your strategy towards supply chain integration, it makes perfect sense to collaborate on the ongoing customer/consumer needs to deliver products that meet those demands and achieve the right balance of performance, quality, cost and sustainability.
*IHS Chemical, Paint and Coatings Industry Overview 2017
**Coatings World, Resins Market Update