"Sometimes it can involve just making a small change, but that can translate into big savings."
ROgier pronk, PA supply chain expert
PA’s Rogier Pronk, supply chain expert, has been quoted in an article in Speciality Chemicals Magazine. The article looks at rising raw material costs and how they have been an issue for speciality chemical companies such as fragrance houses. Rogier comments on supply chain initiatives in order to reduce costs.
Rogier explains how speciality chemical companies can optimise ingredients to cut costs: “Where possible there are efforts to reduce the number of core ingredients used.”
Rogier goes on to say that many speciality chemicals companies are applying complexity management techniques which means buying a smaller range of ingredients and relying on a smaller core of key ingredients, thus reducing complexity and cutting costs.
Rogier explains how better prices can be squeezed from suppliers by concentrating the budget on fewer ingredients: “Sometimes they go to suppliers and say that, in exchange for getting their business over a whole category of ingredients, the supplier must swallow some of the cost on a particular ingredient that has risen a lot in price.”
Rogier comments on the R&D function being increasingly utilised to come up with ways of formulation optimisation, which means using fewer and cheaper ingredients: “This is a fairly new development and it is putting more demands on the R&D department.”
Rogier adds that small changes to the way R&D departments are used can save millions of Euros per year: “Sometimes it can involve just making a small change, but that can translate into big savings.”
Roger concludes by noting that some speciality chemicals companies are taking over suppliers in order to own raw materials, although it is not that common and that the trend could be echoed further downstream.
To read the article in full click here.
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