Marketing for the agile enterprise
Outsourcing driving growth in the chemical distribution industry
Over the last decade changes in the global economy has resulted in the chemical industry experiencing lower margins, reduced profitability and an increased focus on cost reduction. The poor economic outlook drove manufacturers to separate core and non-core business activities and gave rise to the outsourcing trends still evident in the chemical industry today.
Outsourcing is simply using a specialist company or individual outside your company to provide business functions or services that may have been carried out by in-house departments in the past.
Many large companies that once had their own logistical services have closed or sold them and most now use a commodity distributor to provide these services.
Hans Udo Wenzel, CEO Azelis, FECC 2005
It has been this focusing on core activities by producers that has been largely responsible for the marked growth in the chemical distribution sector over the last 5-10 years. Despite the complexities of the industry outsourcing levels appear to be increasing as large and diverse chemical manufacturing companies use it to reduce costs and sharpen the focus on a company’s core business.
Services that were once considered essential are also being outsourced. Why tie up management time and capital in running a road tanker fleet, a computer network or even large sales and marketing teams if your business is making chemicals?
Specialty chemical distributors whose operations are built on sales and marketing skills, as opposed to logistical know-how, have also benefited from outsourcing trends as manufacturers have increasingly handed over small-lot accounts which tied up significant resources for relatively low returns.
Downsizing and the wane of sales & marketing departments
Over the last two decades the sales & marketing departments of large chemical companies have been hit hard by the focus on cost reduction.
Down-sizing has delivered optimum operational efficiency but this has often left them less able to execute critical marketing projects to deliver growth. Often their marketing requirements simply cannot be met by their own over-stretched marketing resources.
Many smaller chemical companies simply can't afford - or don't want - their own in-house marketing department. But all organisations need pro-active marketing, so for a growing number of organisations, marketing outsourcing is a key commercial strategy.
Growth turns up the heat on small chemical distributors
The drive for greater efficiency and cost savings by chemical companies has led to an unprecedented period of growth in the chemical distribution industry.
However, the competition is ‘hotting up’, often at the expense of the smaller distributors, as consolidation trends in the chemical industry filter through to the chemical distribution sector.
Chemical producers and their customers have shifted somewhat towards larger distributors with wider product portfolios and multinational, or even global, locations.
Although the chemical distribution remains highly fragmented, some smaller chemical distributors are in danger of gradually being squeezed out unless they improve their service offering and their competitive positioning.
However, many of these companies suffer from a lack of marketing leadership, expertise and resources to help them develop that vital competitive edge. Many would benefit from drawing on outside marketing assistance. The strategic use of marketing outsourcing can help them overcome the challenges they face.
An important driver of growth is having the right people in the right place and this includes hiring experts to help get your company going in the right direction and building a strong foundation for the future.
Marketing for the agile enterprise
Many chemical companies are already reducing costs, and achieving a higher level of quality, by outsourcing certain parts of the sales & marketing function to professionals experienced in their industry.
Marketing outsourcing increases flexibility by allowing both chemical producers and distributors to pay for only the services they need, when they are needed and provides an ‘on tap’ resource to get those all important marketing projects completed on-time.
You may be putting your brand identity and goodwill in the hands of others, but if it is done discreetly and efficiently, the customer will never even notice.
All firms have basic marketing needs but varying levels of available resources. The challenge is looking at the sales and marketing function and determining which pieces could be better outsourced to experts. Can you keep costs down and achieve a higher level of quality by outsourcing certain functions such as marketing leadership, public relations, graphic design, web site management, direct marketing etc?
What skills do you require but not on a full-time or permanent basis? Consider filling particular short term needs through outsourcing to marketing professionals who know your industry.
About Marketing Outsourcing with Chemagility
Chemagility specialises in providing marketing outsourcing services to both chemical distributors and producers. We provide flexible, practical, on-demand marketing services to support and strengthen your own sales and marketing efforts. Our aim is to help make our clients more agile enterprises able to rapidly adapt to uncertainty and unpredictability in their business environments.