Chemical companies are facing myriad challenges as the calendar turns to 2019. From slowing economic growth to weakening demand in key industries, chemical companies are in greater need for enterprise resource planning (ERP) tools that optimize operations and provide deeper insights.
Here’s a look at the major risks and how the right ERP can address 2019 challenges in chemicals industry.
2019 challenges for chemical companies
What do chemical companies need to consider when planning for 2019? Here are some considerations:
- China Market. China’s ongoing trade dispute with the United States has led to an economic slowdown in the world’s largest market for chemical products. Weakening growth in China, Europe and other regions are a concern across many sectors. The concern is so significant that in Germany, for example, one publication forewarned of a “toxic 2019” for chemical companies in Europe’s largest economy.
- Sustainability. Growing regulatory mandates and tighter supplies of energy and raw materials are making it more challenging for chemical companies. Added to the challenge is the increasing expectation for new approaches that promote conservation, sustainability and recycling. Chemical companies will continue to need to innovate in packaging design (making plastics easier to recycle) and battery recycling. There’s also the growing use of alternate energy sources, such as wind turbines, which is projected to grow from 11 percent of European electricity demand sourcing now 25 percent by 2030.
- Automobile Industry. The decline in demand among automakers is driven by increased investments in engine overhauls to meet restrictive emissions standards and consumer appetite for electric cars.
- M&A Shift. The massive merger-and-acquisition frenzy that has hit the chemical industry in recent years is likely to slow down. Instead, companies will be looking to acquire none-core components of the newly created mega-companies. These smaller acquisitions will put increasing pressure on operational efficiencies and integration management.
- Digital Disruption. When it comes to leveraging recently developed innovative technologies such as the Internet of Things, the cloud and data analytics, chemical companies have focused mostly on internal efficiencies and operations. However, as customers increasingly demand new products and disruptive startups threaten to reinvent many industries, chemical companies would be smart to consider new adoptions of technology that are outward-facing. Technologies such as artificial intelligence, automation, connected sensors and 3-D printing are likely to be the foundation of new products.
- Deglobalization. The global trend towards retrenchment means chemical companies must be ever-vigilant when it comes to supply chain management, finding partners that can source needed materials regionally and globally. There is opportunity here for chemical companies that need to consider carefully into which markets they focus their footprint expansion strategies.
The need for ERP
The challenges and opportunities chemical companies will face in 2019 make it crucial to use an enterprise resource planning software product designed for the industry. Products need to have the tools that address industry-specific needs such as:
- Formulation management
- Chemical property management
- Recipe management
- Supply chain optimization
- Measurement conversions
- Co-product and byproduct management
- Compliance documentation and reporting
A chemical-industry-specific ERP solution allows your company to collect and analyze data, foster collaboration and transparency, and anticipate and respond to emerging market trends. At NexTec Group, we work closely with chemical companies to identify unique needs and select the right ERP to drive better business outcomes. Contact us to learn more about how NexTec can help your chemical business,.