Most chemical suppliers today have digitized their operations primarily

Many chemical suppliers are digitizing – creating online platforms to increase their digital connections. With the development of the industry in this direction, the transparency of the industry and the connectivity of the whole value chain are improved. Many people believe that the third-party chemical distribution model will gain value, improve efficiency, and improve the relationship between distributors and suppliers and customers. In sharp contrast, others believe that third-party distributors will become outdated middlemen and eventually be squeezed out of the market by digitization.

Although these two views are correct to some extent, the actual situation is between them. Digitization is unlikely to eliminate the distributor model or maintain the status quo. On the contrary, distributors and start-ups that build or develop high-quality, innovative online platforms through digitization will succeed, while others may struggle. Given the nature of the industry, successful platforms may have to be built around specific areas or value chains, such as food ingredients, coatings or aquatic chemicals.

Today, most chemical suppliers have digitized their business, mainly to stand out in a competitive market. However, the current covid-19 crisis is transforming the use of digital technology for remote work and customer collaboration into a necessary step for survival, making digitalization far more than a tool for distinguishing differences. As a result, more and more companies in the industry may join the digital trend. As they do, the chemical distribution – including the structure of the industry itself – is likely to be affected.

To further understand this digital transformation, we interviewed more than a dozen major suppliers in the chemical industry. Our research reveals a variety of methods based on factors such as knowledge level, product set and target customer set, and in some cases, even the way distributors define “numbers.”. Some are resisting the change, and even many of those who accept it are moving cautiously, focusing first on the restoration of infrastructure, including modernization of IT infrastructure, enterprise resource planning (ERP), and data cleansing. However, some market leaders are moving faster, investing heavily in digital marketing portals, digital transaction support, and / or innovative digital distribution models. At the same time, new entrants such as xenon arc are fully committed to the “digital first” strategy, providing new channel choices for suppliers and end customers.

The strategic objectives of different chemical suppliers are also different. Some companies already have very clear goals, for example, that digital solutions will account for 50% or more of sales by 2025. Other countries have not set quantitative targets.

To describe these digital efforts, we looked at the value chain of chemical suppliers, from purchasing products to internal operations, to sales and marketing. We find that different practices often depend on whether they involve suppliers, internal processes and logistics, or customers of the value chain.