2019 Trends in The Chemical Industry

By: | Category: Distribution / Manufacturing

In the past, the chemical industry has been slow to invest in technology as a business differentiator. But times are changing. According to the experts at PWC, “the chemical industry may finally be approaching a tipping point, prodded by accelerating technology advances, which are shaping customer purchases and needs, some chemicals companies have begun to rethink their growth strategies, finally moving away from cost-cutting and retrenchment, toward more nimble, coherent, and aggressive business models.

In addition to advanced technologies that enable change, what other factors are prodding chemical companies toward a more growth-oriented posture? When one examines the new trends in the chemicals industry and how chemicals companies can best profit from digital transformation, five strategic imperatives stand out.

Margin Pressure

Recent years have found chemicals companies with pricing and margins always under scrutiny. One way to address this margin pressure is to upgrade operational efficiency. Effective operations increase a business’s bottom line with a chemical-centric ERP and supporting business systems. They will improve asset utilization, enhance yields and efficiencies, and enhance higher employee productivity.

Is time to Upgrade? Read my last post: Telltale Signs Your Chemical Enterprise Needs a Modern Business Management System

Customer Expectations

As the demographics of chemical clients or customers are getting younger, their buying expectations are being set by the easy access they have to products and services. This new generation of buyers expect instant communication, timely responses, with personal REAL time access to information. Chemical companies can use technology to keep customers satisfied by providing customer information exactly the way they want it delivered.


Compliance with government regulations is a business imperative in the chemical industry. These regulatory requirements are constantly changing. Some of the areas impacted are facility process safety, security, chemical product safety, and transportation. Chemical companies must follow the OSHA (Occupational Safety and Health Administration) Hazard Communication Standards, SARA Title III and GHS reports. Utilizing digital transformation, a chemical company can be more flexible in responding to compliance issues and regulation changes, from disseminating the required changes to all forms and channels to helping to ensure the company remains compliant with the new regulations.

M&A Activity

Merger and acquisition activity in the U.S is growing rapidly. With companies spending more as they see increased cash levels, M&A is still the primary focus of those funds. Moreover, this is expected to continue. As financial transparency is a crucial factor in evaluating a potential acquisition target, utilizing a robust and updated ERP system solidifies the attractiveness of a candidate for acquisition.

Whether it involves M&A value and integration, digitization, or deglobalization, the best way to tackle the impact of fundamental disruptions is to first identify how they will affect your company and then develop a set of tactics to take advantage of the opportunities. These issues are increasingly front and center in the chemical industry and will determine the contours of the sector’s growth and dynamics in the coming 12 months and beyond. Hiding from them will only reinforce the slow growth environment that has become all too familiar to too many chemicals companies.

Opportunity for business model innovation

The opportunity in the chemical industry for business innovation is dramatically reshaping the way people live, work and communicate with each other. The Chemical Industry is contributing to how ideas and innovations can turn into sophisticated products such as; touch screens, drones, rechargeable batteries in portable devices, organic light-emitting diodes in flexible electronics and more. At the same time, the industry is itself being transformed seeking opportunities to benefit from digital technologies in areas that include operational excellence through digitalization.

Whether it’s margin pressure, customer expectations, regulation, M&A activity or business model innovation, the best way to deal with these ever intensifying trends and issues is to identify them clearly (not to hide under a rock). Then you can fully understand how your company is affected and begin to utilize the opportunities that digital transformation offers to address these areas. In the chemical industry it is clear, these issues are increasingly on the minds of business leaders now and will remain so in the future.