After a turbulent few years, the tide seems to be turning for the chemicals industry.
Knowing what to look for in 2019 and how an industry-specific enterprise resource planning (ERP) solution can make a major difference sets chemicals companies up for a productive new year.
With a positive outlook for the chemicals industry in 2019, ERP considerations should come into the fore for companies looking to drive better operations and controls designed with the industry in mind.
The American Chemistry Council projects a 3.6 percent increase in U.S. production for 2019, up from a projected 3.4 percent bump in 2018. The ACC attributes the optimistic outlook to several factors:
- Rising exports
- Increase in manufacturing
- Strong potential for global growth
- Demand from end-use markets
- Balanced chemical inventory levels
- Favorable shale gas economic conditions
That positive forecast follows a mixed 2017 for the industry. The ACC believes optimal economic conditions, continued demand in housing and automotive industries and strong supplies of shale and liquid natural gas will lead the strengthening trend for 2019. Growth is projected for 2019 in coatings, consumer products, crop protections, fertilizers and petrochemicals.
What to look for in 2019
For chemical companies looking to stay on the cusp of key industry trends, there are several factors to consider in 2019, including:
- Changing Demand. As customers get younger, they expect simple access to products and services. They want personal relationships with companies and brands, meaning chemicals companies need to use technology to create two-way relationships.
- Margins. Recent years have brought tightening pressure on pricing and profit margins. Maintaining operational excellence, such as the use of an industry-specific ERP solution, is a key step for chemicals companies to maximize assets and improve productivity.
- Regulatory Pressure. Compliance continues to be an issue for chemicals companies to manage compliance obligations from multiple regulatory jurisdictions. To deliver the right reporting and management requirements, companies are increasingly relying on an ERP solution. Doing so allows for better tracking and reporting.
- Mergers & Acquisitions. The massive mergers and purchases of the past few years are likely to give way to smaller purchases of non-core business assets.
- Productivity Drivers. The industry has focused on improving productivity over the past two decades with demonstrable results. Maintaining productivity and profitability will continue to give chemicals companies a strong negotiating position with suppliers and customers.
- Digitalization. As customers demands’ have evolved, so too have the mechanics by which products are sold. Companies are relying increasingly on new marketing and sales practices that previously would have only applied to B2C companies but are increasingly becoming the norm in the B2B space.
The need for industry-specific ERP
While ERP tools have been around for decades, too often chemicals companies have had to make do with solutions that are not built to address their needs. Today’s companies need an ERP that has core functionality that includes:
- Process Functionality including measurement unit conversions, shelf-life and inventory control and materials planning
- Tracking and Tracing of products and components to the warehouse and throughout the production cycle with forward and backward traceability
- Formula Management to track ingredients and intermediates, scale batches and global change management
- Quality Control for consistency across runs and precise measures of shelf life, product quality and expiration dates
NexTec helps chemicals companies prepare for the future with insights into industry-specific ERP solutions that meet critical needs. Learn More about ERP and see how NexTec helps with the selection and implementation of ERP systems.