The chemical industry has seen recent successes in many areas, however could that success be further amplified?
The chemical Industry is a leader in production, with the U.S. providing over 15% of the world’s chemicals. In recent years, the industry has seen some significant growth within exports, revenue, and investments. Along with major industry success, however, comes additional obstacles to overcome. While the chemical industry appears to be on an upward trajectory, there are still a few issues that continue to impede full realization of growth initiatives.
Speaking with our members in the chemical industry – who represent $65 billion in annual revenue – CoVest has found that many of them continue to face challenges in several areas, including financial performance (margins and ROI), a constantly changing business environment and acquisition of needed skills and capabilities. Based on our solid track record, CoVest is able to assist companies through these modern day hurdles.
Downward Pressure on Margins and ROI
The US based chemical industry is an $800 billion diverse industry, with a tremendous amount of dependency on global economic growth patterns. The downward pressure on margins and ROI has been precipitated by volatile energy prices, raw material availability, global competition and foreign exchange fluctuations, making it imperative to pursue every opportunity for cost efficiency and expense reduction.
How CoVest Can Help
Companies that take control of their complex procurement processes can release hidden financial potential, in some cases reducing indirect spend costs by 2% to 5%. With an industry like chemical that’s investing about $60 billion in research and development annually, it’s critical to optimize savings as much as possible. CoVest aims to do just that by providing group purchasing agreements that typically generate 7% to 16% ongoing savings.
CoVest also offers in-depth category management, which provides comprehensive analytics to maintain savings. While other companies find comfort in initial savings achieved, our goal is to find a way to not only obtain the best savings but to maintain them as well. We do this through a six step category management process which consists of:
- Data collection
- Core list rewrites
- Annual price change analysis
- Quarterly savings analysis and reporting
Business Growth Hindered by Ability to Attract and Retain Needed Talent
With the industry facing an aging workforce, international competition for the same resources, and with recent advancements in industry technology, additional and new skills are required.
The chemical industry provides over 800,000 skilled, good-paying American jobs. While that seems like a lot at first glance, this number is distinctly lower than in the late 1990s, when almost one million employees were reported. Even with its annual pay of nearly $93,000 (47% higher than the average manufacturing pay) the chemical industry is having difficulty attracting and retaining the needed talent.
How CoVest Can Help
CoVest provides access to a well-established network of highly skilled temporary labor, hourly, professional and technical business resources that can be made available in a compressed timeframe.
Recently, CoVest unveiled the CoVest Talent Exchange. This partnership with HCMWorks brings a new bundle of benefits to our members. From having the ability to competitively source temporary labor requests (eliminating the direct supplier relationships) to obtaining access to a cloud-based technology that allows hiring managers to manage their temporary labor activity, members now have a very unique sourcing capability.
The CoVest Value
Providing indirect spend management through analytics and leveraged supplier partnerships, CoVest assists with more than just savings. Our current chemical industry members maximize benefits achieved by employing many of CoVest’s features and advantages. These members utilize 22 categories and average 6.6% year-over-year savings in indirect materials and services with CoVest’s ongoing category management services. With 96% of all manufactured goods being directly touched by the same type of chemical, there are plenty of opportunities to further the industry’s growth objectives through engaging a provider of indirect spend management.
Find out if CoVest is right for you by visiting our website, www.covest.com or contacting us directly, (216) 325-5128
Statistics taken from the American Chemisty Council