[ID] => 11581
[post_author] => 34
[post_date] => 2019-10-02 09:12:53
[post_date_gmt] => 2019-10-02 08:12:53
[post_content] => The European Association of Chemical Distributors (Fecc) held its 2019 Annual Congress in the seaside town of Sitges, Spain this past 12 to 14 June, with more than 150 participants on hand to discuss the challenges facing the sector in a world of volatility and unpredictability. Professionals from all parts of the supply chain, including chemical manufacturers, logistics service providers (LSPs), traders and customers took part, providing a very useful overview of current sentiment across the industry.
The 2019 Fecc Congress, under the banner ‘Voices of the Future’, offered a totally new format, which included a full programme on the first day plus a half day of networking activities (a catamaran tour followed by a lunch in Sitges) on the second day. This year’s programme was characterised by two plenary debate sessions where participants could interact with the speakers and the moderator by asking questions or sharing their view via the Fecc2019APP. The Congress app provided the audience with several functionalities, including messaging, questions, live polling, survey and a timeline.
Thanks also to the ability of an excellent moderator, Katrina Sichel, the full day was marked by a lively discussion around the themes of digitalisation and cyber security, promoting and attracting young and diverse talents into chemical distribution, value chain and services for the future and sustainability. The panels underlined that the industry still shows massive growth potential, even though distributors still face clear challenges, which need quick adaptation and a renewed vision.
As the Congress progressed, the discussions on the key topics were transformed into images on the wall of the meeting room, thanks to the visual representation of David Jesus Vignolli – a London-based visual artist and founder of VisualScribing.com - who offered the participants his artistic interpretation of events, which raised plenty of smiles among those who read through his take on the day.
After an introduction by Fecc president Neville Prior, chairman of UK-based distributor Cornelius, the scene was set by Gordon Hay, strategic consultant with Powercounsel, and Frank Schneider of IMCD Deutschland and a member of the executive committee of IMCD Group BV. They introduced the concept of the ‘New Fecc’ and examined a report prepared for Fecc by the Boston Consulting Group (BCG).
According to the BCG report, direct sales still dominate the chemical industry, with only 10 to 12 per cent of sales going through distributors. This is a very low figure compared to other industrial sectors – which is as high as 80 or 90 per cent in the pharmaceuticals sector, for instance – indicating that there is plenty of scope for future development, especially in China and elsewhere in the Asia-Pacific region.
Current global sales in the chemical distribution sector are greater than €100bn per year and, over the next five years, this figure is expected to grow at more than 5 per cent per year, with the Asia-Pacific region out-performing the rest of the world with annual growth of 6.2 per cent.
This is, Schneider said, “a challenge for us” but one that chemical distributors should be able to cope with. “If we grow faster than the chemical industry, it doesn’t mean we are taking money out of the system,” he added, it is merely a sign that manufacturers are focusing more on their core activities and relying increasingly on well qualified chemical distributors to handle the sales and supply functions.
But, as Gordon Hay said, there are threats to distributors’ position in the market from the emerging digitised sales process. “Digitisation of core processes is an absolute necessity,” he stressed. This is not just basic connectivity between suppliers and customers – that’s “entry level stuff,” he said – although distributors that cannot do these things are going to be out of the game.
More worrying is the potential for chemical manufacturers to take over the distribution space through digitisation – some of the larger suppliers are already offering online sales – or for other external interests or even LSPs to come in and disrupt the value chain.
To counter these threats, chemical distributors will need to look more seriously at value-added services and leverage their proximity to the market to offer data back up the supply chain.
There is also a demographic risk to chemical distributors; they need to understand it and mitigate is through strategic workforce planning. There are, Hay said, no easy solutions but distributors need to focus on recruitment and transferring skills between departments.
Similarly, the increasing focus on the need for sustainability offers lots of win/win opportunities across the supply chain. Distributors do, though, need to be aware of the higher costs and disruption to existing practices that may come as a result of environmental policies, decarbonisation and new regulation.
LET’S GET DIGITAL
Fecc had gathered an informed panel to discuss digitisation in the chemical distribution sphere. Neil Carr, business president, coatings at Dow, said that the nature of the business is about to “fundamentally change”. This is scary for some existing employees, he said, and chemical producers and distributors both need people who can get excited by data. That comment drew the remark, “You can convert to loving data!” from Sibylle Mutschler, head of Digital4Clariant, Clariant’s digitisation programme.
There is, though, no recipe to follow, Mutschler said. “You can’t just buy solutions and put them to work.” Each company needs to address the necessary changes through cross-functional teams working towards a common goal. “They have to leave their egos at the door,” she added.
Axel Schmidt, chief digital officer at Wacker Chemie, said his company sees lots of opportunities through digitisation, especially in saving costs, increasing efficiency and improving the customer experience. There is, he said, also the opportunity to improve employees’ lives, even if employees (at all levels) also present a challenge.
Dani Loughran, managing director of Aston Chemicals, took a rather more practical approach. Chemical distributors are being squeezed between the divergent needs of their suppliers and customers and are put in a position where they are being asked to absorb complexity; speed and efficiency are crucial and distributors need systems that can deliver that. “We can’t invest in thing and wait to see if they work,” she added. “We don’t have the time or money for that.”
Bringing a more youthful perspective to the conversation was Lotte Vater, global distribution manager at Synthomer, who is so young (27) that she has never seen a fax. From her point of view, the main challenge of digitisation lies in getting older people to do their jobs differently. “We have to convince them that their job will be more enjoyable,” she said.
PLATFORM FOR SALES
Should distributors be scared of new platforms offering online chemical sales? Thorsten Lampe, managing director of Asellion, which is one of those platforms, explained that what they are doing is mirroring what happens in real life. “Tinder provides an easy way to say ‘no’ and chemical distributors need a similar button,” he observed. Carr was not so sure: Dow has its own front-end that offers direct sales. This has changed its relationship with some distributors but, he said, it is not a substitute.
Schmidt admitted that platforms are driving a shift in power down the supply chain. The end customer can now buy whenever it is most convenient for them. Chemical distributors have to take this on board – if they get it right they will be partners for both ends of the deal. Mutschler said it is not the buying itself that is the unmet need that platforms offer, but functions such as the provision of samples, information, safety data, tracking or finding partners for innovation.
It did seem that, in comparison to other sectors of the chemical supply chain, the conversation about digitisation among distributors and their suppliers is focusing very much on lubricating the existing channels. There was plenty of talk of standalone project and of improving efficiency and reducing costs, for example, but nothing really transformational. Dow is still insisting on showing a return on its investment in digital projects, something that others in the logistics chain have said is not a route they feel able to go down. Perhaps it is something about the nature of the distribution function that is different – this is a face-to-face relationship, not simply a business-to-business affair.
PARTNERS IN PROFIT
A second plenary debate addressed distributors’ role in the value chain services of the future, looking particularly at sustainability, security and safety. Participants on both sides of the market stressed the need for mutual understanding and partnerships, with Holger Heidemann, vice-president of global distribution at Elementis, saying that, while distributors can bring local market intelligence, manufacturers need to make their strategy clear to the distributor if the partnership is to deliver the value the manufacturer expects.
Neil Carr agreed: “If you’re going to use a channel partner for distribution, you need to know why – and it’s not always clear.” Is it to gain access to local markets? Is it about the availability of assets? The distributor should not duplicate the work of the manufacturer but focus on what it can do better – which may involve digitisation. Manufacturers need to actively manage their distributors, not merely devolve responsibilities.
Jörg Naumann, global head of supply chain management at Clariant, explained that, for him, distributors play an important role in easing complexity by taking on the customers that the producer finds it hard to serve. In an ideal world, he said he would like to digitally integrate distributors into the supply chain as they understand the value added by his products and can help sell them and expand the market. Unfortunately, the distributors currently being used cannot do that.
Julia Bourne, business development manager at Aston Chemicals, agreed; Aston makes an effort to understand the products it is handlinG and solve problems for the manufacturer as well as the end user, she said. This means having a highly trained team in place that can handle that complexity and effectively act as an extension of the manufacturer.
Klaud Hald Winstroem, head of coatings, adhesives and specialities for northern Europe at Covestro, said the company is planning to hand over a lot of its smaller customers to distributors to reduce complexity. “Distributors are better at taking care of those customers and can grow the business,” he said. His advice to distributors was two-fold: get to know the local market, and don’t be afraid of the digital journey.
Elsewhere during the Congress, there was much talk of the need to put women into leadership positions and to develop new talent although, looking at the panel sessions and the delegates, chemical distributors are well ahead of other parts of the supply chain in both those metrics.
At the end of the three days, with attendees having had plenty of opportunity to network and to see some of the sights of the Barcelona region, the meeting was wrapped up by Neville Prior, who announced that the 2020 Congress will take place in Milan on 27 to 29 May. Full information will be available soon on the Fecc website, www.fecc.org
[post_title] => FECC: Future days
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[post_name] => fecc-future-days
[post_modified] => 2019-09-27 09:22:07
[post_modified_gmt] => 2019-09-27 08:22:07
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